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Towards an explanation of a declining trend in capacity utilisation in the US economy

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  • Santiago J. Gahn

Abstract

In this paper I analyse a declining trend of effective capacity utilisation in the United States. After identifying determinants of normal capacity utilisation in the literature, I find that this declining trend of the FRB’s capacity utilisation is also present in the output-capital ratio of the NBER-CES sectoral database since 1958. Results suggest that permanent changes on technical change (K/L), distribution (W/Y ) and output have transitory effects on the output-capital ratio, my proxy of effective capacity utilisation.

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  • Santiago J. Gahn, 2022. "Towards an explanation of a declining trend in capacity utilisation in the US economy," Working Papers PKWP2214, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp2214
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    More about this item

    Keywords

    capacity utilisation; technical change; income distribution; Panel Structural VAR;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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