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Growth, Capital Scrapping, and the Rate of Capacity Utilisation

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  • Olivier Allain

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UPD5 - Université Paris Descartes - Paris 5)

  • Nicolas Canry

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

The aim of this short article is to build a model in order to take into account capital scrapping (or bankruptcies) in an income distribution and growth model. The reason to introduce capital scrapping results from the intuition of some inconsistencies between theoretical predictions and empirical facts: the rate of capacity utilisation data often exhibit a greater stability than it is expected after reading theoretical models. We think that capital scrapping might contribute to stabilise the utilisation rate. The idea is as follows: an increase of the profit share implies a decrease of the rate of capacity utilisation which then involves a rise in capital scrapping (or in the rate of bankruptcies).

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  • Olivier Allain & Nicolas Canry, 2008. "Growth, Capital Scrapping, and the Rate of Capacity Utilisation," Post-Print hal-00355932, HAL.
    • Handle: RePEc:hal:journl:hal-00355932
    Note: View the original document on HAL open archive server: https://hal.science/hal-00355932
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    Cited by:

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    3. Kornai, János, 2010. "Hiánygazdaság - többletgazdaság. Tanulmány a piac elméletéről - II. rész [Shortage economy - surplus economy. A study on market theory II]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1021-1044.

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