IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Productivity Measurement Using Capital Asset Valuation to Adjust for Variations in Utilization

  • Ernst R. Berndt
  • Melvyn A. Fuss
Registered author(s):

    Although a great deal of empirical research on productivity measuremant has taken place in the last decade, one issue remaining particudarly controversial and deaisive is the manner by which one adjusts the productivity residual for variations in capital and capacity utilization. In this paper we use the Marshallian framework of a short run production or cost function with certain inputs quasi-fixed to provide a theoretical basis for accounting for variations in utilization. The theoretical model implies that the value of services from stocks of quasi-fixed inputs should be altered rather than their quantity. This represents a departure from most previous procedures that have adjusted the quantity of capital services for variations in utilization. In the empirical illustration, we employ Tobin's q to measure the shadow value of capital, and find that for the U.S. manufacturing sector, we can attribute about 50% of the traditionally measured decline in productivity growth during 1973-77 to a decline in capacity utilization. Hence, adjusted for utilization, the 1973-77 productivity slowdown in U.S. manufacturing is considerably less than that measured using traditional productivity accounting techniques.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.nber.org/papers/w0895.pdf
    Download Restriction: no

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0895.

    as
    in new window

    Length:
    Date of creation: May 1982
    Date of revision:
    Publication status: published as Berndt, Ernst R. and Melvyn A. Fuss. "Productivity Measurement Using Capital Asset Valuation to Adjust for Variations in Utilization." Journal of Econometrics, November 1986.
    Handle: RePEc:nbr:nberwo:0895
    Note: PR
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Thor Hultgren, 1960. "Changes in Labor Cost During Cycles in Production and Business," NBER Books, National Bureau of Economic Research, Inc, number hult60-1, June.
    2. John W. Kendrick, 1973. "Postwar Productivity Trends in the United States, 1948–1969," NBER Books, National Bureau of Economic Research, Inc, number kend73-1, June.
    3. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75, pages 321.
    4. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, vol. 16(3), pages 339-365, August.
    5. George J. Stigler, 1947. "Trends in Output and Employment," NBER Books, National Bureau of Economic Research, Inc, number stig47-1, June.
    6. Holland, Daniel M & Myers, Stewart C, 1980. "Profitability and Capital Costs for Manufacturing Corporations and All Nonfinancial Corporations," American Economic Review, American Economic Association, vol. 70(2), pages 320-25, May.
    7. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    8. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, June.
    9. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters, in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc.
    10. Denny, Michael & Fuss, Melvyn, 1983. "A general approach to intertemporal and interspatial productivity comparisons," Journal of Econometrics, Elsevier, vol. 23(3), pages 315-330, December.
    11. Thor Hultgren, 1960. "Appendices to "Changes in Labor Cost During Cycles in Production and Business"," NBER Chapters, in: Changes in Labor Cost During Cycles in Production and Business, pages 79-85 National Bureau of Economic Research, Inc.
    12. George J. Stigler, 1947. "Introduction to "Trends in Output and Employment"," NBER Chapters, in: Trends in Output and Employment, pages 1-2 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0895. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.