modelling long run scenarios this paper intends to draw overall lessons from a long term study on co2 emission in france a country with a rather low energy gdp ration and in which transition to non fossil based production of electricity has been achieved more generally it points out the importance of possible bifurcation effects and draws methodological and policy implications from these statements it discusses modelling approaches to the linkages between energy and the rest of economy and addresses the issue of difficulties in cost assessment analysis in the presence of several baseline scenarios finally it proposes a more encompassing definition of no regrets policies

adjusting input output models for capacity utilization in service industries abstract the input output i o models assume the stability of economic ratios and regional multipliers over the evaluation period for manufacturing sectors constant multipliers within a short term period may present a reasonable picture of the real world production function tourism industry however is composed of a variety of services in which total output and factor inputs are strongly influenced by capacity utilization cu a conceptual model is proposed in this paper which purports that shifts in cu for perishable services will lead to economies of scale in inputs price changes in the final output capacity constraint on domestic supply and substitution between input factors especially between capital and labor these factors simultaneously modify i o ratios and multipliers traditional i o analysis which assumes constant economic ratios and multipliers will therefore lead to biases in tourism impact estimates especially to value added components as it does not reflect the changing costs of operation in response to shifting supply and demand

nonparametric measures of scale economies and capacity utilization an application to u s manufacturing abstract an economic measure of scale efficiency is the ratio of the minimum average cost to the average cost at the actual output level of a firm it is easily measured by the ratio of the total cost of this output under the constant and variable returns to scale assumptions this procedure does not identify the output level where the average cost reaches a minimum this paper proposes a nonparametric method of measuring this output level using dea the relation between this efficient production scale the short run physical capacity output and the most productive scale size mpss is also discussed an empirical application using state level data from u s manufacturing is used to illustrate the procedure the dea findings are further analyzed using a smoothed bootstrap procedure

primal and dual capacity utilization an application to productivity measurement in the u s automobile industry capacity utilization measures have traditionally been constructed as indexes of actual as compared to potential output this potential or capacity output y can be represented within an economic model of the firm as the tangency between the short and long run average cost curves economic theoretical measures of capacity utilization cu can then be characterized as y y where y is the realized level of output these quantity or primal cu measures allow for economic interpretation they provide explicit inference as to how changes in exogenous variables affect cu additional information for analyzing deviations from capacity production can be obtained by assessing the dual cost of the gap in this article the definitions and representations of primal output and dual cost cu measures are formalized within a dynamic model of a monopolistic firm as an illustration of this approach to characterizing cu measures a model is estimated for the u s automobile industry 1959 1980 and primal and dual cu

the role of energy in productivity growth the objective of this paper is to analyze the role of energy in the growth of productivity the special significance of energy in economic growth was first established in the classic study energy and the american economy 1850 1975 by sam schurr and his associates 1960 at resources for the future for the period from 1920 to 1955 schurr noted that energy intensity of production had fallen while both labor and total factor productivity were rising the simultaneous decline in energy intensity and labor intensity of production ruled out the possibility of explaining the growth of productivity solely on the basis of substitution of less expensive energy for more expensive labor since the quantity of both energy and labor inputs required for a given level of output had been reduced technical change is also a critical explanatory factor an alternative explanation for growth of output with declining energy and labor intensity required an examination of the character of technical change this examination was motivated by the fact that from 1920 to 1955 the utilization of electricity had expanded by a factor of more than ten while consumption of all other forms of energy only doubled the two key features of technical change during this period were that the thermal efficiency of conversion of fuels into electricity increased by a factor of three and that the unusual characteristics of electricity had made it possible to perform tasks in altogether different ways than if the fuels had to be used directly schurr 1983 p 3 schurr 1982 has recently extended the analysis of energy and the american economy through 1981 for the period through 1969 his conclusions are as follows although the inverse relationship between total factor productivity and energy intensity virtually disappeared during the 1953 1969 period it is still noteworthy that high rates of improvement in total factor productivity were essentially not associated with increases in energy intensity 1982 p 6 schurr 1982 has analyzed the experience of the u s economy in the aftermath of the oil embargo of 1973 he points out that energy intensity of production has fallen steadily since 1973 and that the rate of decline accelerated sharply after the second oil price shock in 1979 following the iranian revolution he goes on to point out that

measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries following a tradition established by cassels klein and hickman we employ the economic theory of cost and production and define economic capacity output as that output at which short and long run average total cost curves are tangent to one another capacity utilization cu rates are then computed as the ratio of actual to capacity output we implement this framework empirically by specifying and estimating a translog variable cost function for the manufacturing sectors of nine oecd countries we find that by the end of the historical sample the early 1980s pervasive and chronic excess capacity exists while the average cost consequence of excess capacity was relatively modest in the 1960s the burden increased considerably after opec i and after opec ii the premium was as large as 15 of average total costs we also find that electricity and fuel price increases had small impacts on capacity output relative to that from labor or capital finally we adjust conventional measures of multifactor productivity growth for changes in cu and find that the adjusted growth is larger after 1973 than that based on traditional procedures

on the utilisation controversy a theoretical and empirical discussion of the kaleckian model of growth and distribution this paper examines the utilisation controversy around the kaleckian model of growth and distribution we show that the federal reserve data on capacity utilisation which have been used by both sides of this debate are the wrong kind of data for the issue under examination instead a more appropriate measurement can be derived from the data on the average workweek of capital we argue that the long run dynamic adjustment proposed by kaleckian scholars lacks a coherent economic rationale we provide an alternative path towards the endogeneity of the desired utilisation at the micro and macro levels finally we examine the proposed adjustment mechanism econometrically our results verify the endogeneity of the normal utilisation rate

scale economies and over capitalization in japanese electric utilities this paper presents empirical evidence on scale economies and overcapitalization in japanese electric utilities we employ the short run equilibrium model in which the variable cost function treats capital stock as a quasi fixed factor we specify the variable cost function as a translog form and estimate it using panel data of nine japanese electric utility firms during the period 1981 to 1985 our results show that eight of the nine firms experience scale economies in the short run but diseconomies in the long run and that seven firms significantly over capitalize as expected by the averch johnson effect

long and short run non parametric cost frontier efficiency an application to spanish savings banks the utilisation rate of installed capacity is a popular concept in both the performance appraisal literature and in publications on industrial organisation however a common consensus has yet to be reached concerning the most appropriate way to measure the capacity utilisation of physical inputs and its final effect on company results on the one hand there are approaches that establish capacity utilisation with reference to the maximum level of production that can be achieved in contrast there are other approaches more strictly related to economic analysis of operating costs in this paper our main objective is to define an analytical process that uses non parametric frontier methodology to provide the distance between the total costs of a given unit and the short run frontier costs as a natural extension of this proposal it is possible to compute the short run inefficiency caused by a non optimal dimension of the fixed inputs we define this as capacityefficiency the proposed evaluation process is applied to spanish savings banks covering the period between 1986 and 1995 throughout the period analysed the greater part of cost inefficiency is due to capacity efficiency 2002 elsevier science b v all rights reserved

on the economic interpretation and measurement of optimal capacity utilization with anticipatory expectations this study builds on recent research giving the notion of capacity utilization clearer economic foundations in this research optimal output ye is defined as the minimum point on the firm s short run average total cost curve and capacity utilization is then computed as cu y y where y is actual output here i extend these concepts to include adjustment costs due to changes in the stock of capital and nonstatic expectations of future output demand and input prices the more general notion of cu is shown to depend on the shadow values of the firm s quasi fixed inputs and is decomposed to isolate the effects of anticipatory expectations an empirical comparison is then made between traditional indices and alternative economic cu measures using annual u s manufacturing data 1954 1980 the calculated indices exhibit plausible patterns which can be interpreted as the effects of nonstatic expectations and adjustment costs

micro and macro elasticities in a life cycle model with taxes we build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work we find that changes in taxes have large aggregate effects on hours of work moreover we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers in our model micro and macro elasticities are effectively unrelated our model is also consistent with other cross country patterns

the fisher hypothesis and international capital markets in a closed economy with interest taxes at rate and with a constant real et rate of interest the nominal rate of interest should rise by 1 1 points for every point rise in the expected rate of inflation however a large body of empirical work examines the determinants of nominal interest rates and generally finds that the coefficient of expected inflation is close to or less than one we model the determination of interest rates in an open economy with taxes under plausible conditions increases in inflation cause the nominal interest rate to rise roughly point for point this suggests that open capital market considerations are central for understanding aggregate economic behavior the analysis also suggests that inflation is not neutral with respect to the real net interest rate earned by domestic savers or paid by domestic borrowers

cost structure and capacity utilisation in multi product industries an application to the basque trawl industry to empirically study production structure and the capacity level at which vessels are harvesting a short run translog cost function is estimated from the estimated parameters two capacity utilisation measures are calculated ray returns to scale and a dual capacity utilisation measure both capacity utilisation measures suggest that there is excess capacity in the basque trawler fleet these measures are also estimated annually and they indicate the same conclusion the basque trawler fleet can therefore gain from increased production levels

a simulation study of the interactive effects of taxes and inflation on the relative price of land recent experience in the united states with high and variable inflation has led to an outpouring of research concerning inflation s impact on the relative prices of real and financial assets with the exception of three recent papers feldstein 1980a rose 1986a alston 1986 the impact of inflation on the relative price of land has been neglected land is usually eliminated from economic models of the tax system so that the effects of inflation s complex interaction with the income tax system on firm financing and valuation of capital can be highlighted in this paper we take the opposite approach the effects of inflation on corporate financing of capital are suppressed by allowing only bond financing in order to highlight the effects of inflation and tax rate changes on the relative price of land

real options wage bargaining factor subsidies and employment the paper combines a translog variable cost function a bargaining model of wage determination and a real option model determining real capital using this framework the effect of factor subsidies on labour demand is estimated based on aggregate panel data for norwegian manufacturing industry in the period 1980 1988

the impact of electric power on productivity according to the historical record the increased use of energy in general and electric power in particular stands as one of the key factors in productivity growth growth accountants however find little support for this view rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in us manufacturing in this study an attempt at reconciling the historical record with the empirical facts is made specifically the commonly used factor income shares in the relevant divisia input growth index are replaced by the estimated output input elasticities the latter attribute a considerably larger role to electric power than previous studies indicated these are then used to reevaluate the sources of growth in us manufacturing

capacity utilization measures underlying economic theory and an alternative approach measures of industrial capacity utilization hereafter cu have been used extensively in helping to explain changes in the rate of investment labor productivity and inflation the cu measures have also been used to obtain indices of capital in use as distinct from capital stock in place a number of alternative measures of cu are periodically calculated and published the 1980 economic report of the president for example contains three series that by the federal reserve board the u s department of commerce bureau of economic analysis and the wharton school of finance other publicly available series are those prepared by mcgraw hill publishing company the u s department of commerce bureau of the census and rinfret boston associates inc although a host of cu measures is publicly available it is not at all clear how one should interpret changes over time in each measure or variations among them a principal reason underlying these interpretation problems is that the crucial link between underlying economic theory and the constructed measure of cu is weak one way in which this issue has manifested itself in the policy domain over the last five years has been with respect to the uncertain effects of dramatic increases in energy prices on capacity output and on cu each of the cu measures noted above is computed in such a way that explicitly ignores any role for energy prices yet several times during the last decade though growth to apparently high rates of cu had taken place investment and average labor productivity were much lower than expected and the rate of price increase much greater in brief during the last decade the explanatory power of alternative cu measures has dropped sharply some have conjectured that post opec energy price increases may have brought about major changes in the u s economy so that old quantitative relationships between measured cu and investment labor productivity and price inflation may have been altered substantially in order to assess effects of changes in pe on cu a re examination of the notion and measurement of cu is needed based on the framework of the economic theory of the firm that is the focus of this paper

on the measurement of capacity utilization capacity utilization is usually defined as the ratio of actual output to the output corresponding to 1 the minimum point on the short run average total cost curve and 2 the point of tangency between the long run average total cost and short run average total cost curves in practice however capacity utilization is often measured as the ratio of actual to the maximum potential output consistent with a given capital stock this paper demonstrates how to estimate the theoretical measures of capacity utilization and examines the correlation between three measures of capacity utilization and the mcgraw hill estimates of capacity utilization using data from a sample of u s privately owned electric utilities for 1961 83 copyright 1989 by blackwell publishing ltd

comparative performance of short run capacity utilization measures abstract we present parametric estimates for primal and dual capacity utilization and then evaluate their comparative performance empirical findings indicate that alternative capacity utilization ratios depending upon the reference variables are procyclically consistent with each other

energy price shocks and productivity growth in us and uk manufacturing because sustained changes in the trend of productivity growth are so very important for people s long run economic welfare the dramatic productivity growth slowdown of the 1970 s and early 1980 s has been the focus of much analysis and discussion for some observers it was much more than coincidence that the oil price shocks of 1973 74 accompanied the sharp slowdowns in traditionally measured productivity growth not only in the united states and the united kingdom but throughout the industrialised world however establishing quantifying and explaining sig nificant linkages between energy price shocks and productivity growth has proved to be most difficult traditional and time honoured relationships involving productivity growth have all seemed incapable of explaining this slowdown for example edward denison author of several widely cited productivity studies has concluded that energy had essentially no role in explaining the productivity growth slowdown and that moreover what happened is to be blunt a mystery 1979 p 4

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

the intertemporal dimension of neoclassical production theory abstract the aim of this survey paper is to provide a guide to the literature on optimal dynamic factor demands to the non specialist reader interested in applied work we start with the distinction between variable and quasi fixed factors of production and use these to characterize the firm s temporary equilibrium we then review the optimal intertemporal behaviour of the firm using the notion of adjustment costs as a means to solve the firm s optimization problem this process gives rise to a system of interrelated dynamic factor demands in a flexible accelerator format theoretical difficulties and empirical limitations of this model are discussed this fact leads us to review the theory of intertemporal duality we next analyze the issue of expectations in this class of dynamic models a section reviewing the empirical work on dynamic factor demands follows after which we offer some concluding remarks

economies of scale and utilization in the swiss electric power distribution industry economies of scale and utilization in the swiss electricity distribution industry are analysed a translog variable cost function was estimated using panel data for a sample of 39 municipal utilities over the period 1988 1991 economies of both scale and utilization appear to exist in the distribution of electricity both for small medium and large sized utilities thus the empirical evidence suggests sub additivity of the cost function over the relevant range of output for the swiss electricity distribution utilities a necessary condition for a natural monopoly to exist

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

the demand for capital labor and energy in european manufacturing industry before and after the oil price shocks the price and substitution elasticities for factor inputs capital labor fuels and electricity are estimated for total manufacturing industry on the basis of a pooled crosscountry time series analysis for nine west european countries the impact of the economic disturbances in the 1970s on the price sensitivity of demand is analyzed by estimating a translog cost function for two separate periods 1960 72 and 1973 80 hicks neutral technical change is rejected for both periods the results indicate some quite significant changes in the elasticities over the two periods

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

the effects of resource depletion on coal mining productivity the solow residual has a direct interpretation as a measure of technical change under perfect competition and constant returns to scale when these conditions do not hold the residual has to be appropriately adjusted in order to be considered a correct measure of technical change we argue that in extractive industries the solow residual is also affected by the continuous depletion of a non renewable resource therefore we provide a new decomposition of the solow residual for extractive industries in which the level of reserves is likely to affect extraction costs our empirical results illustrate the role played by the depletion of reserves in the measurement of productivity of coal mining in spain

static efficiency decompositions and capacity utilisation integrating economic and technical capacity notions starting from existing static decompositions of overall economic efficiency on nonparametric production and cost frontiers this article proposes more comprehensive decompositions including several cost based notions of capacity utilization furthermore in case prices are lacking we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilization these new efficiency decompositions provide a link between short and long run economic analysis and in empirical work avoid conflating inefficiency and differences in capacity utilization an empirical analysis using a monthly panel of chilean hydro electric power plants illustrates the potential of these decomposition proposals

capacity and capacity utilization in common pool resource industries excess capacity poses one of the most pressingproblems that arise when industries exploitcommon pool natural resources it entailsover investment in the capital stock andexcessive use of variable inputs and placesadditional exploitation pressures on theresource stocks confusion persists over theappropriate definition and measurement ofcapacity and capacity utilization for theseindustries but understanding capacity and itsmeasurement is necessary to properly design acapacity management program this paperaddresses these issues by overviewing theconceptual and theoretical bases for capacityand capacity utilization measurement identifying specific problems for common poolresources outlining alternative methodologiesfor their measurement and illustrating the useof these definitions and measurement methods ina fisheries case study

differentials at firm level productive capacity realization in bangladesh food manufacturing an empirical analysis this article empirically estimates the firm specific productive capacity realization pcr indices using the stochastic frontier production function and analyses a number of variables explaining realization rates across firms and over time following battese and coelli 1995 the stochastic frontier production function is used to estimate capacity output and thereby pcr using the firm level panel data from bangladesh food manufacturing the results show that capacity realization rates widely vary across firms and over time the average rate of realization is about 65 implying that most of the firms are producing away from their full production capacity this article also identifies several firm specific and policy related variables explaining capacity realization the results show that firm size sze and outward orientation opn have positive while capital intensity cnsty market structure mstre and effective rate of assistance era have negative impact on realization rates strikingly both poli

exchange rate dynamics an empirical investigation this paper estimates a reduced form exchange rate equation whose estimates are used to address questions on exchange rate overshooting intermediate run exchange rate dynamics and long run proportionality relationships between relative money supplies and exchange rates based on swiss u s data from the period 1973 79 the major findings are that following a monetary shock there is short run exchange rate overshooting by a factor of about two and that subsequent exchange rate adjustments to a new long run equilibrium take longer than 2 years and exhibit nonmonotonic patterns

why do europeans work so little market work per person is roughly 10 higher in the united states than in sweden however if we include the work carried out in home production the total amount of work only differs by 1 i set up a model and show that differences in policy mainly taxes can account for the discrepancy in both labor supply and home production between sweden and the united states these results are independent of the elasticity of labor supply

impactos das distorcoes tributarias sobre a determinacao da oferta de trabalho usando um modelo de crescimento neoclassico prescott 2004 e ohanian et alii 2008 explicam com sucesso as diferencas de horas trabalhadas entre paises da ocde aplicamos este mesmo modelo para o caso brasileiro entre 1988 e 1998 nossa principal conclusao e que esta metodologia falha em explicar a experiencia brasileira o modelo preve como consequencia do aumento de impostos verificado no periodo uma queda substancial no numero de horas trabalhadas entretanto os dados mostram apenas uma leve queda utilizamos ainda especificacoes alternativas para a preferencia do agente representativo as quais tornam a oferta de trabalho menos sensivel a impostos entretanto o ajuste aos dados e satisfatorio apenas para par metros bastante distantes daqueles utilizados pela literatura internacional sugerimos que a presenca significativa de um setor informal pode explicar a especificidade brasileira

liquidity capital controls and exchange rates abstract we present a two country extension of lucas 1990 work on how cash in advance constraints in asset markets affect the pricing of financial assets in the model there is some degree of separation between the goods markets and the asset markets and money is used for transactions in both markets the main results of the paper are the following first the equilibrium level of the exchange rate depends on the share of money used for asset transactions a greater share corresponds to a more appreciated currency second capital controls in the form of taxes on foreign asset acquisitions tend to appreciate the exchange rate third the maturity structure of the public debt affects the equilibrium exchange rate in particular a move towards a longer maturity structure will tend to depreciate the exchange rate jel 31

measuring embodied technical change in the us local telephone industry this study attempts to measure the rate of embodied technical change by using a short run variable cost function that contains arguments for labour and capital quality in this short run variable cost model the expansion of the amount of physical capital increases variable costs due to more maintenance outlays and then it leads to improvements in capital quality when a measure of competition is included as a proxy for organizational efficiency improvements in labour and capital quality explain more than two thirds of productivity growth the degree of returns to scale and the shadow cost of capital input in the embodiment cost model are presented as well the study is based on pooled time series and cross section data of eight us local exchange carriers

excess capacity a permanent characteristic of us airlines this paper examines the permanence of excess capacity in the us airline industry to avoid the problems with the standard engineering measure of capacity utilization load factor we define and measure capacity as an economic concept two measures of economic capacity utilization are then computed one a demand based measure and the other an output based measure of capacity utilization both measures share little in common with the standard engineering measure load factor and reveal some interesting attributes of airline travel demand this paper also provides interesting new insights into the role of deregulation and the costs of excess capacity during regulation specifically it is found that deregulation with the concomitant rationalization of route structures enabled airlines to move closer to their optimal levels of capacity and facilitated substantial improvements in capacity utilization and cost reductions over the period considered 1998 john wiley sons ltd

the impact of disaggregated energy on productivity abstract the issue of the productivity slowdown of the 1970s and 1980s has received considerable analysis in the literature however the issue of the impact of energy on productivity is still debated this study contributes to the debate with the hope that some sight could be provided through disaggregating the factor input energy into two components a petroleum component and a non petroleum component by analysing labour productivity growth total factor productivity growth and labour intensity ratios the disaggregated energy component can be viewed as a major influence in explaining the productivity decline

international technological knowledge differences and economic growth comparisons usa versus west germany and sweden versus norway 1963 1988 the main interest in this paper is governed by the methodology for making evolutive growth comparisons in the international context the paper analysis differences in levels and changes of these levels of aggregate output between the above mentioned countries in terms of differences in factors input and levels of technological knowledge for the period 1963 1988 sources of economic growth in each country are also examined on an annual and average annual basis th conclusion is that technological knowledge differences between countries hold a central role in explaining output differences between them a slight overtake of the technological lead is observed in comparing sweden and norway between 1977 and 1985 when a recovery by sweden begining in 1986 is detected a certain part of the output differences between the us and west germany is explaining by the differences in technology between these two countries however capital intensity in the us is found to be almost double in 1988 and this accounts fo

the quantitative consequences of raising the u s saving rate the authors investigate the consequences of a permanent unphased increase in the u s gross saving rate they find that the sacrifice time the time that elapses until consumption surpasses the value it would have had under the initial saving rate is roughly six years and is insensitive to the percentage increase in the saving rate delta sub s the percentage gain in output at the end of decade the decade gain is roughly 26 of delta sub s while the percentage gain in consumption is roughly 8 of delta sub s the saving rate return the internal rate of return on a permanent increase in the saving rate is roughly 16 and is insensitive to delta sub s copyright 1991 by mit press

a model of covered interest arbitrage under market segmentation existing models of covered interest arbitrage typically assume market participants have equal capital and foreign exchange market access this paper derives sufficient conditions for the existence of neutral interest parity forward price bands when capital markets are segmented and exchange rates are dually quoted all forward price intervals are completely characterized in terms of simultaneous two way and one way arbitrage flow possibilities the parameters of the no arbitrage price region are shown to be established on the basis of relative advantage with respect to the set of available arbitrage strategies copyright 1991 by ohio state university press

constant utility paths and irreversible global warming this paper shows that the hartwick rule for sustainable utility with depletable resources still applies to the case of the greenhouse effect from fossil fuel carbon emissions although a carbon tax is necessary for sustainable utility it is sufficient that the sum of net energy rents and carbon tax revenues is invested in reproducible capital examination of recent savings rates and energy cost shares suggests that this may be difficult to achieve with current global savings rates jel classification q32

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

estimation of cost functions in a data poor environment the case of capacity estimation in fisheries fisheries economic analysis is often handicapped by the lack of adequate data to undertake robust econometric analyses in this study a translog cost function was required to estimate the potential direction of adjustment in a uk fleet segment if a new regulatory regime was introduced however the available data were not appropriate for such estimation data envelopment analysis dea was used to modify the data subsequently used in the estimation of the long run cost function the resulting model appears robust and is consistent with economic theory and the supporting evidence produced using dea

the effects of an increase in power rate on energy demand and output price in korean manufacturing sectors in korea price subsidies for industrial power are provided by the government in order to enhance industrial competitiveness and curb inflation however this repeatedly causes electricity shortages in the peak summer and winter seasons because of over consumption forcing a decline in the demand for electricity by raising power rates would thus help prevent a national blackout lowering dependence on foreign energy and reducing co2 emissions cost effectively this paper simulates the effects of a rise in power rate on demand for electricity and output price by estimating a restricted cost function in which the quantity of raw materials is set to its cost minimizing level jointly with an inverse supply relation for the top three electricity intensive manufacturing sectors the empirical results indicate that a 10 increase in electricity rate would result in 8 0 10 1 less demand across all three manufacturing sectors ceteris paribus the impact on output price is of little statistical significance in the basic metals sector while output price on average falls by 0 16 in the tv and communication equipment sector

modeling production for general equilibrium analysis the purpose of this paper is to present econometric models of producer behavior suitable for incorporation into a general equilibrium model implementation of these models requires a time series of inter industry transactions tables second implementation requires methods for estimation of parameters in systems of nonlinear simultaneous equations finally the economic theory of producer behavior implies equality and inequality restrictions on the parameters that must be incorporated into the estimation we discuss an empirical application to modeling producer behavior in thirty six industrial sectors of the u s economy

taxation and inflation a new explanation for capital flows abstract in a world of mobile capital the current system of taxation implies that the after tax cost of capital and return to saving in each country are negatively correlated with the rate of inflation thus a country s net foreign asset position ought to be negatively correlated with its long run inflation rate the magnitude of these effects is shown to be potentially large for oecd countries cross section and time series regressions confirm that inflation rates are good predictors of net foreign assets the existing distribution of net foreign assets may therefore largely reflect tax distortions

measures of capacity utilization and its determinants a study of indian manufacturing we estimate capacity utilization cu rates in for selected industries in indian manufacturing for the 20 year period 1976 1996 we estimate a generalized leontief variable cost function with capital as a quasi fixed input to derive our cu measures using error component techniques we note substantial variations in cu both across industries and over time in general we find that cu rates were higher in the earlier time period dropped in the mid 80s and started rising again in the early 90s cu rates in our analysis are sensitive to input prices with the sole exception of the price of labor we also confirm the standard result that variations in demand are a significant driving force for variations in cu we find that cu is positively related to the magnitude of labor intensity in production this holds for both between industries and within industries empirical results also indicate that traditional measures of cu such as minimum capital output ratio and peak to peak are not appropriate proxies for

capacity utilisation and profitability a decomposition of short run profit efficiency the principal aim of this paper is to measure the amount by which the profit of a multi input multi output firm deviates from maximum short run profit and then to decompose this profit gap into components that are of practical use to managers in particular our interest is in the measurement of the contribution of unused capacity along with measures of technical inefficiency and allocative inefficiency in this profit gap we survey existing definitions of capacity and after discussing their shortcomings we propose a new ray economic capacity measure that involves short run profit maximisation with the output mix held constant we go on to describe how the gap between observed profit and maximum profit can be calculated and decomposed using linear programming methods the paper concludes with an empirical illustration involving data on 28 international airline companies the empirical results indicate that these airline companies achieve profit levels which are on average us 815m below potential levels and that 70 of the gap may be attributed to unused capacity

firm entry excess capacity and endogenous productivity abstract we show that sluggish firm entry causes productivity to vary endogenously in response to technology shocks the endogenous productivity effect is caused by incumbent firms utilizing excess capacity as entry adjusts we develop a nonparametric model of endogenous sunk costs and monopolistic competition to show that imperfect competition and dynamic entry are necessary and jointly sufficient conditions for endogenous productivity fluctuations quantitatively we show the endogenous productivity effect is as large as that from a traditional capital utilization effect

decomposing capacity utilization in data envelopment analysis an application to banks in india abstract this paper briefly reviews the existing methods of capacity utilization in nonparametric framework from economic perspectives and then suggests an alternative in the light of limitations therein in the spirit of work by coelli et al coelli t j grifell tatje e perelman s 2002 capacity utilisation and profitability a decomposition of short run profit efficiency international journal of production economics 79 261 278 we propose two methods radial and non radial to decompose the input based physical technological capacity utilization into various meaningful components viz technical inefficiency ray economic capacity utilization and optimal capacity idleness a case study of indian banking industry is taken as an example to illustrate the potential application of these two methods of decomposition our two broad empirical findings are that first competition created after financial sector reforms generates high efficiency growth and reduces excess capacity second the cost gap of the short run cost from the actual cost is higher for the nationalized banks over the private banks indicating that the former banks though old do not reflect their learning experience in their cost minimizing behavior

economic reforms and productive capacity realisation in bangladesh an empirical analysis using firm level data from the bangladesh food manufacturing sector this paper examines the impact of economic reform on productive capacity realisation in the eighties the results suggest that although improvement occurred in the realisation of productive capacities after the implementation of economic reforms there is however room for significant further improvement in increasing output by realising the unrealised capacity

cost structure and capacity in the norwegian pelagic fisheries the parameters of the short run cost function are estimated for three vessel types taking part in the norwegian pelagic fisheries purse seine vessels trawlers and coastal vessels the generalized translog functional form is used estimates of returns to scale are calculated and the results indicate that there are substantial economies of scale in all vessel classes it is further investigated whether excess capacity varies with vessel size and age the analysis suggests increased quotas per vessel to avoid rent dissipation with the total allowable catch given the number of participating vessels must be reduced

revenue based capacity utilisation measures and decomposition the case of danish north sea trawlers in fisheries capacity analysis has largely been limited to measuring physical capacity defined as the maximum amount of output that can be produced per unit of time given existing plant and equipment and unrestricted availability of variable inputs an economic measure of capacity can be defined as the maximum revenue attainable for the given fixed inputs using relevant outputs and output prices this paper examines these two approaches to capacity by applying data envelopment analysis to physical and economic input output data for danish north sea trawlers the economic and physical measures are compared and contrasted using correlation analysis an innovative analysis into the composition of possible revenue increments is also presented and reasons for economic inefficiency of vessels are identified

interpretation and measurement of capacity utilization the case of korean manufacturing this paper focuses attention on the conceptual difference between optimal ex ante and actual ex post capacity untilization cu the dynamic version of the efficient output approach to capacity untilization which this paper presents is theoretically superior to other alternative approaches our concept of optimal cu has been applied to estimate cu measures for korean manufacturing we fing that our measure of cu explains the trends and cycles in korean economy rather convincingly and that korean manufacturing has adjusted much more flexibly to market demand shocks than it has to exogenous changes in factor prices from the examination of the determinants of cu we find that while wages and material prices have positive effects on cu energy prices and capital stock have nagative effects the study also implies that overambitious government incentive policies to stimulate investment may have an adverse effect on capacity utilization

interrelated factor demands for manufacturing a dynamic translog cost function approach abstract in this paper we report the results of estimating a joint model for labour capital and energy using the transcendental logarithmic cost function of christensen jorgenson and lau 1973 this allows us to determine both the own price and cross elasticities of substitution between labour capital and energy we combine a model of factor shares with a dynamic adjustment process for each factor we also impose on the cross equation restrictions necessary to provide additivity homogeneity and symmetry since the covariance matrix in systems of share relationships is singular we follow the suggestions of anderson and blundell 1982 and employ a mullivariate error corrrection model the results suggest that additivity symmetry and homogeneity restrictions do hold and that there are short run increasing returns to scale

the non neutrality of inflation for international capital movements this paper studies the question of how unilateral changes in the rate of inflation affect the international allocation of capital presenting a model that incorporates a transaction motive for money holding and capital income taxation with historical cost accounting it counters the view that inflation will be neutral in a world of perfect foresight and costless arbitrage under mild conditions domestic inflation will unambiguously induce a capital export the paper includes a discussion of the fisher effect the empirical observation of a less than one to one translation of inflation into nominal interest rates is shown to be compatible with the model and in fact the capital export turns out to be stronger the lower the degree of translation

unraveling the productivity growth slowdown in the u s canada and japan the effects of subequilibrium scale economies and markup measures of productivity growth typically include in the productivity residual the impacts of fixity of factors subequilibrium costs of adjustment returns to scale and markups this paper proposes a general framework for adjusting the residual to accommodate these impacts by first correcting and then decomposing traditional measures use of the framework is illustrated empirically for the united states japanese and canadian manufacturing sectors using an econometric model that allows explicit incorporation and measurement of these factors the adjusted measures show that a significant amount of cyclical and secular change in measured productivity growth can be attributed to production characteristics other than technical change particularly scale effects copyright 1992 by mit press

capacity utilization and its determinants for a container shipping line theory and evidence under utilization of fleet capacity appears to be a long lasting issue in the container shipping industry also there are some difficulties unsolved while measuring the ratio of capacity utilization cu of a container shipping line from the perspective of an engineering approach the slots capacity installed is the most popular way to represent the capacity output since the slots capacity installed lacks theoretical support this study adopts an economics model to find the capacity output of a shipping line further the derived cu ratio identifies the realized utilization of fleet capacity for a shipping line focused on the three largest container shipping lines in taiwan this article shows that their fleet capacity are totally under utilized and the movement patterns of cu ratios are approximately identical in addition the variations of cu ratios also suggest that the enactment of ocean shipping reform act has contributed a positive effect on the capacity utilization of a container shipping line