IDEAS home Printed from https://ideas.repec.org/p/pke/wpaper/pkwp1814.html
   My bibliography  Save this paper

On the “utilisation controversy”: a comment

Author

Listed:
  • Santiago J. Gahn

    (Niccolò Cusano University (IT))

  • Alejandro González

Abstract

In a recent contribution, Nikiforos (2016) has claimed that the FED data on capacity utilisation is stationary by construction, and thus, not suitable to test the Neo-Kaleckian model. He then proceeds to provide new series on capital utilisation, which he claims are non-stationary and provide, supposedly, support for the Neo-Kaleckian model. This comment presents two interrelated claims. First, the measurement error that Nikiforos claims to be I(1) in the FED series is I(0), and what is measured with error is only the level of the series. Thus, this series is suitable to test the Neo-Kaleckian model. Secondly, he does not provide unit root tests for the series he suggests as superior to the FED. When this exercise is carried out, almost all unit root tests decidedly reject the existence of a stochastic trend on his 3 proposed series, which, according to the author, do not lend support to the Neo-Kaleckian model. We conclude that measures of capacity utilisation based on FRB data are a reasonable source to test the implications of a wide variety of macroeconomic models.

Suggested Citation

  • Santiago J. Gahn & Alejandro González, 2018. "On the “utilisation controversy”: a comment," Working Papers PKWP1814, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp1814
    as

    Download full text from publisher

    File URL: https://www.postkeynesian.net/downloads/working-papers/PKWP1814.pdf
    File Function: First version, 2018
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michalis Nikiforos, 2016. "On the ‘utilisation controversy’: a theoretical and empirical discussion of the Kaleckian model of growth and distribution," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(2), pages 437-467.
    2. Choi,In, 2015. "Almost All about Unit Roots," Cambridge Books, Cambridge University Press, number 9781107097339, January.
    3. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164.
    4. James A. Duffy & David F. Hendry, 2017. "The impact of integrated measurement errors on modeling long-run macroeconomic time series," Econometric Reviews, Taylor & Francis Journals, vol. 36(6-9), pages 568-587, October.
    5. Shapiro, Matthew D, 1986. "Capital Utilization and Capital Accumulation: Theory and Evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 211-234, July.
    6. J. Beaulieu & Joe Mattey, 1998. "The Workweek of Capital and Capital Utilization in Manufacturing," Journal of Productivity Analysis, Springer, vol. 10(2), pages 199-223, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. de Oliveira, Guilherme, 2023. "On the utilization controversy in the demand-led growth literature: A quantile unit root approach," Economic Modelling, Elsevier, vol. 126(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michalis Nikiforos, 2019. "On the "Utilization Controversy": A Rejoinder and Some Comments," Economics Working Paper Archive wp_940, Levy Economics Institute.
    2. Santiago J. Gahn, 2020. "Is there a decreasing trend in capacity utilisation in the US economy? Some new evidence," Working Papers PKWP2006, Post Keynesian Economics Society (PKES).
    3. Michalis Nikiforos, 2021. "Notes on the accumulation and utilization of capital: Some empirical issues," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 679-695, November.
    4. Chatterjee, Santanu, 2005. "Capital utilization, economic growth and convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 29(12), pages 2093-2124, December.
    5. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    6. Santiago José Gahn & Alejandro González, 2022. "On the empirical content of the convergence debate: Cross‐country evidence on growth and capacity utilisation," Metroeconomica, Wiley Blackwell, vol. 73(3), pages 825-855, July.
    7. Michalis Nikiforos, 2013. "The (Normal) Rate of Capacity Utilization at the Firm Level," Metroeconomica, Wiley Blackwell, vol. 64(3), pages 513-538, July.
    8. Clayton Webb & Suzanna Linn & Matthew J. Lebo, 2020. "Beyond the Unit Root Question: Uncertainty and Inference," American Journal of Political Science, John Wiley & Sons, vol. 64(2), pages 275-292, April.
    9. Michalis Nikiforos, 2011. "On the Desired Rate of Capacity Utilization," Working Papers 1116, New School for Social Research, Department of Economics.
    10. Yuriy Gorodnichenko & Matthew Shapiro, 2011. "Using the Survey of Plant Capacity to Measure Capital Utilization," Working Papers 11-19, Center for Economic Studies, U.S. Census Bureau.
    11. Sustek, Roman, 2009. "Nonconvex Margins of Output Adjustment and Aggregate Fluctuations," MPRA Paper 17486, University Library of Munich, Germany.
    12. Klarl, Torben, 2022. "Fragile robots, economic growth and convergence," Economic Modelling, Elsevier, vol. 112(C).
    13. Jennifer L. Castle & David F. Hendry & Andrew B. Martinez, 2022. "The Historical Role of Energy in UK Inflation and Productivity and Implications for Price Inflation in 2022," Working Papers 2022-001, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    14. Villa Stefania, 2012. "Capital Utilization and the Amplification Mechanism," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-22, September.
    15. David F. Hendry, 2020. "A Short History of Macro-econometric Modelling," Economics Papers 2020-W01, Economics Group, Nuffield College, University of Oxford.
    16. Michalis Nikiforos, 2020. "Notes on the Accumulation and Utilization of Capital: Some Empirical Issues," Economics Working Paper Archive wp_953, Levy Economics Institute.
    17. Eric Hillebrand & Søren Johansen & Torben Schmith, 2020. "Data Revisions and the Statistical Relation of Global Mean Sea Level and Surface Temperature," Econometrics, MDPI, vol. 8(4), pages 1-19, November.
    18. Ghosh, Soumya Kanti & Nath, Hiranya K., 2023. "What determines private and household savings in India?," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 639-651.
    19. Tsang, Shu-ki & Ma, Yue, 1997. "Simulating the impact of foreign capital in an open-economy macroeconomic model of China," Economic Modelling, Elsevier, vol. 14(3), pages 435-478, July.
    20. Kevin S. Nell & A.P. Thirlwall, 2017. "Why does the productivity of investment vary across countries?," PSL Quarterly Review, Economia civile, vol. 70(282), pages 213-245.

    More about this item

    Keywords

    Neo-Kaleckian model; Capacity Utilisation; Stationarity; Workweek of Capital;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pke:wpaper:pkwp1814. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jo Michell (email available below). General contact details of provider: https://edirc.repec.org/data/pksggea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.