Using the Survey of Plant Capacity to Measure Capital Utilization

53 Pages Posted: 6 Jul 2011

See all articles by Yuriy Gorodnichenko

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Matthew D. Shapiro

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 1, 2011

Abstract

Most capital in the United States is idle much of the time. By some measures, the average workweek of capital in U.S. manufacturing is as low as 55 hours per 168 hour week. The level and variability of capital utilization has important implications for understanding both the level of production and its cyclical fluctuations. This paper investigates a number of issues relating to aggregation of capital utilization measures from the Survey of Plant Capacity and makes recommendations on expanding and improving the published statistics deriving from the Survey of Plant Capacity. The paper documents a number of facts about properties of capital utilization. First, after growing for decades, capital utilization started to fall in mid 1990s. Second, capital utilization is a useful predictor of changes in capacity utilization and other factors of production. Third, adjustment of productivity measures for variable capital utilization improves statistical and economic properties of these measures. Fourth, the paper constructs weights to aggregate firm level capital utilization rates to industry and economy level, which is the major enhancement to available data.

Suggested Citation

Gorodnichenko, Yuriy and Shapiro, Matthew D., Using the Survey of Plant Capacity to Measure Capital Utilization (July 1, 2011). US Census Bureau Center for Economic Studies Paper No. CES-WP-11-19, Available at SSRN: https://ssrn.com/abstract=1879883 or http://dx.doi.org/10.2139/ssrn.1879883

Yuriy Gorodnichenko

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://www.econ.berkeley.edu/~ygorodni/index.htm

National Bureau of Economic Research (NBER) ( email )

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IZA Institute of Labor Economics ( email )

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Matthew D. Shapiro (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

and Survey Research Center
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National Bureau of Economic Research (NBER) ( email )

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313-764-2769 (Fax)

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