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We identify US defense news shocks as shocks that best explain future moviments in defense spending over a five-year horizon and are orthogonal to current defense spending. Our identified shocks are strongly correlated with the Ramey (2011) news shocks, but explain a larger share of macroeconomic fluctuations and have significant demand effects. Fiscal news induces significant and persistent increases in output, consumption, investment, hours and the interest rate. Standard DSGE models fail to produce such a pattern. We propose a sticky price model with variable capital utilization, capital adjustment costs, and rule-of-thumb consumers that replicates the empirical findings and allows us to test the validity of our methodology for extracting anticipated fiscal shocks from the data.

The possibility that automation capital is idle has been so far neglected in the literature. However, we show that the departure from the full utilization assumption has significant transitional as well as long-run consequences for growth. We show that capital utilization can bring down the convergence speed as well as the long run growth rate towards an empirically plausible number provided that the elasticities of depreciation with respect to physical and automation capital utilization are sufficiently heterogenous. If not, or if heterogenous utilization elasticities tend to infinity, the model fails to produce results that are line with empirical data. The point is that it is not the introduction of capital utilization per se but the relationship between the elasticities of utilization of automation and physical capital that is relevant to produce empirically plausi­ble speeds of convergence and growth rates.

Even though non-interest expenses on physical capital and labor comprise at least 40 percent of banks’ total costs, much of the banking literature entirely ignores real resource costs. This paper shows that whenever banks realize economies of scope in the use of resources, banks’ balance-sheet choices are inextricably linked to their decisions regarding employment of capital and labor and demonstrates that the intensity of capital utilization must be systematically related to the loan-deposit ratio. Based on U.S. banking data, we provide empirical evidence supporting this prediction.

We examine the role of inventories and capacity utilization (of both capital and labor) for the propagation of business cycle fluctuations. We document a new set of facts regarding the U.S. cyclical regularities of inventories and capacity utilization. First, we find that capital utilization and the flows of services from both capital and labor are procyclical, and comove with the holdings of inventories. Second, we find that labor utilization is procyclical as well, but is weakly negatively correlated with inventories. We build a model that accounts for these facts, and also accounts for the stylized inventory facts, i.e., inventory holdings are procyclical, while the inventory-to-sales ratio is countercyclical. The analysis is centered on the effects of two possible shocks: preference (demand) shocks and technology shocks. Our model shows that inventories and the rate of capital utilization are mostly complements, while inventories and the rate of labor utilization are mostly substitutes. It further shows that temporary demand shocks emphasize the role of inventories as being a “shock absorber,” whereas high-persistence demand shocks, as well as technology shocks of any persistence, emphasize the role of inventories as being a complement to consumption.

Optimal decisions by economic agents regarding the utilization of capital lead to empirically plausible speeds of convergence in one-sector models of economic growth. The relationship between depreciation and capital utilization plays a crucial role in slowing down convergence to the steady state. Cross-country differences in the extent to which the capital utilization decision is internalized along the transition path may lead to differences in convergence rates, even for countries with similar initial and terminal conditions. Finally, by assuming a constant depreciation rate and full capital utilization, standard growth models may be overstating the magnitude of the steady-state equilibrium.

The objective of this paper is to measure the growth of TFP in 36 sectors and the whole of the economy of Taiwan during 1978–1999 by using detailed sectoral data that are adjusted in order to account for input–output tables and the capital utilization rate. The major findings are as follows. First, for the Taiwan economy as a whole, the TFP growth rate is estimated to be 3.01% per annum during the whole of the 1978–1999 observation period, while it is estimated to be 2.95% after adjusting for the capital utilization rate. Second, the relative contribution of TFP adjusted during 1978–1999 for the capital utilization rate to output growth is found to be as high as 41.0%, which is close to the relative contribution of the capital input (46.2%) and much higher than the relative contribution of the labor input (12.8%). Consequently, the Krugman–Kim–Lau–Young hypothesis, i.e. the ‘input-driven growth’ hypothesis is found not to apply to Taiwan during 1978–1999. This finding reinforces the conclusions of Liang (1995) and Liang (2002).

This paper shows the effects of endogenous capital utilization and habit formation in consumption on the predictions of a small open economy model calibrated to Canada. Capital utilization improves the fit of the model by increasing the volatility of output, investment, and hours worked, while habit formation improves the fit of the model by improving the dynamic properties of consumption and the current account. It is also shown that while shocks to the world interest rate sometimes improve the fit of the baseline model, they do not improve the fit of the model with capital utilization and habit formation. JEL classification: E32, F32 Utilisation du capital et formation d’habitudes dans un modele de petite economie ouverte. Ce memoire etudie les effets de l’utilisation endogene du capital et de la formation d’habitudes de consommation sur les previsions d’un modele de petite economie ouverte calibre pour le Canada. L’utilisation du capital ameliore l’ajustement du modele en accroissant la volatilite de l’output, de l’investissement et des heures travaillees, alors que la formation d’habitudes ameliore l’ajustement du modele en ameliorant les proprietes dynamiques de la consommation et du compte courant. On montre que si des chocs affectant les taux d’interet au niveau mondial ameliorent parfois l’ajustement du modele de base, ils n’ameliorent pas l’ajustement du modele quand il y a utilisation de capital et formation d’habitudes.

This note sheds new light on the dynamic properties of maintenance and repair and examines the behavior of an additional form of capital spending—that of improvements. The analysis examines a unique long-run data set on Swiss road spending.

The usage of information technology (IT) towards sustainable economic growth is found to yield three main effects: (1) an efficiency effect , (2) a scale effect, and (3) a capital utilization effect. The first two effects are multiplicative whereas the third effect is additive on aggregate output productivity. In essence, this paper suggests that IT is more productive only if the economy is capable of replacing its sustainable capital resources at a rate exceeding that of consumption sacrifice.

The present study examines the production technology of South Korean manufacturing by linking TFP growth to parameters of a translog cost function. The sources of a productivity growth in 22 industrial sectors were identified by decomposing the measured growth in TFP into technology, returns to scale and capital utilization for the 1963–83 period. The study shows that, first, the major source of the rapid growth of Korean manufacturing was the growth of factor inputs (labor, capital, and materials); second, the returns to scale accounted for half of the growth in TFP; and third, technical change contributed 45 percent of TFP growth, while capital utilization accounted for only a small portion of TFP growth. [D 24]

In this study, it takes Shandong Volleyball Team as an example, which analyses existing sources of capital, broadens channels of capital sources, in order to find the current distress in capital channel on Shandong Volleyball Teams' development. That's to say: 1st line of Shandong competitive sports have great advantages on social sponsorship and sel f management, which should take their advantages to increase sources of capital; 2nd line of Shandong sports schools should focus on sports sponsorship and self management, so as to expand its sources of capital. The government should ensure the stability of investment on 3rd line sports schools, and increase investment greatly. Followed by analysing and acquitting a large number of data, it tries to find the influencing relationship between capital changes and high-level development, look for a best proportion between capital input and output, in order to maximum improve capital utilization of current high level sports team.

The book of Genesis starts the analysis of social conflict with the Paradise story. Chapter 2 argued that the Paradise story heuristically sets up the analysis of the institutional problem in the Old Testament, that is, cooperation problems and problems of societal contracting. This chapter critically reconstructs in economic terms some of the key stories that follow the Paradise story. The chapter traces social conflicts, even anarchy, in the book of Genesis that concern incentive structures, dilemmatic interactions regarding capital contributions and distributions, mutual gains and economic man. In relation to the absence or presence of these ideas, I examine how far behavioural, theological models of societal contracting can be found in the Old Testament or whether economic modes for resolving social conflict and organizing cooperative behaviour were pursued. The thesis emerges that, as the stories of Genesis unfold, economic modes increasingly replaced behavioural ones.

The objective of this note is to document the importance of improvements relative to the other forms of capital spending and to determine whether improvements have similar cyclical properties as maintenance and repair. To shed some light on these issues, we look at a unique data set on Swiss road spending. The data on road spending are broken down into new roads, road improvements, and road maintenance and repair (hereafter road maintenance). The long-run evidence finds that road improvement is larger in size than road maintenance and exhibits similar dynamic properties as road maintenance. This result strengthens the view of McGratten and Schmitz (1999) that countercyclical spending of firms on maintenance (and on improvement) of existing capital is too large to be ignored.

One of the first issues that arises when attempting to disentangle the determinants of productivity growth is distinguishing between short and long run costs. This in turn raises other capital-related questions, particularly about capacity utilization and its representation.

Studies of the firm's demand for factor inputs often assume a constant rate of utilization of the inputs and ignore the fact that the firm can simultaneously choose the level and the rate of utilization of its inputs. In particular, the literature on dynamic factor demand models has, until recently, largely overlooked the issue of capital utilization and/or did not distinguish carefully between the distinct concepts of capital and capacity utilization. In this paper we allow for variations in the rate of capital utilization within the context of a dynamic factor demand model by adopting a modeling framework within which the firm combines its beginning-of-period stocks with other inputs to produce its outputs as well as its end-of-period stocks. We also derive measures of productivity and capacity utilization for the adopted modeling framework. Given the depreciation rate is endogenous a consistent capital stock series must be generated during estimation from the investment data. This yields, as a byproduct, a consistent decon1position of gross investment into replacement and expansion investment. As an illustration, the model is applied to U.S. Electrical Machinery data.

A Solow-type vintage capital model with capital utilization is used to estimate the long-term average embedded rate of improvement in energy efficiency of Soviet fixed-capital commissionings: 2.6% per year. The results are combined with planned Soviet capital stock growth to forecast cap Soviet energy requirements through 1990. The implied Soviet capital utilization goals call for greater energy savings than have been achieved in the past. The results also identify an upper bound for rates of hidden inflation contained in Soviet capital commissionings data. It appears an estimate such as S. Cohn's 1% (Soviet Stud. 33, 2:269–299, 1981) is far more likely than A. Nove's 6 to 7% (Soviet Stud. 33, 1:142–145, 198 1).

The neoclassical growth model studied in the Kydland and Prescott ‘Time to Build’ paper is modified to permit the capital utilization rate to vary. The effect of this modification is to increase the amplitude of the aggregate fluctuations predicted by theory as the equilibrium response to technological shocks. If, following Solow, the changes in output not accounted for by changes in the labor and tangible capital inputs are interpreted as being the technology shocks, the statistical properties of the fluctuations in the postwar United States economy are close in magnitude and nature to those predicted by theory.

This article presents the main results of a survey of the utilisation of existing productive capacity in the Indonesian manufacturing sector. It was found that although prevailing levels of capital utilisation in Indonesian manufacturing do not appear to be out of line with levels observed in other developing countries, there is scope for improvement in some sectors. The paper suggests some policy reforms which would improve the competitive environment for Indonesian manufacturing and increase the price ratio of capital to labour, thus promoting more intensive capital utilisation in the manufacturing sector. ∗ This article is a revised version of two papers presented at a seminar on ensuring fuller utilisation of capacity in the manufacturing sector, organised by the Departemen Perindustrian, Biro Perencanaan, Jakarta, 27–28 February, 1985. The authors wish to thank an anonymous referee for helpful and stimulating comments.

A model is presented for the estimation of production technology when capital is endogenously utiliz ed. The present model permits the firm to choose the rate of utilizat ion and level of maintenance applied to its capital equipment such th at the user cost of capital services is minimized. The model is one o f two-stage optimization and estimation. The two stages are integrate d, using duality theory, through the generation of an instrumental us er cost variable in the first stage. The instrumental user cost is th en utilized for the estimation of the aggregate technology. The resul ts are compared to results obtained from standard models with exogeno us capital utilization and the emerging biases are discussed. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.