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Productivity Growth and Capacity Utilization

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  • Gu, Wulong
  • Wang, Weimin

Abstract

This paper presents a non-parametric approach for adjusting the multifactor productivity growth (MFPG) measure for variations in capacity utilization over time. In the framework developed here, a capital utilization measure is derived from the economic theory of production and is estimated by comparing the ex-post return with the ex-ante expected return on capital. The non-parametric approach is then compared with the parametric approach and the standard growth accounting framework. Both the non-parametric and parametric approaches correct for the cyclical bias in the standard MFPG measure, but the non-parametric approach offers more practical adjustment for capacity utilization, because it is easier to implement and more in line with the non-parametric approach long used by statistical agencies and researchers.

Suggested Citation

  • Gu, Wulong & Wang, Weimin, 2013. "Productivity Growth and Capacity Utilization," Economic Analysis (EA) Research Paper Series 2013085e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp5e:2013085e
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    Cited by:

    1. Andrew Sharpe, 2015. "Ontario's Productivity Performance, 2000-2012: A Detailed Analysis," CSLS Research Reports 2015-04, Centre for the Study of Living Standards.

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    Keywords

    Economic accounts; Productivity accounts;

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