Capacity utilization and the measurement of misallocation

Jing Hang

Economics Letters, 2022, vol. 214, issue C

Abstract: This paper studies the measurement of misallocation when firms can vary their utilization rate of capital. Variable utilization introduces measurement errors in firm productivity that are increasing in the capital market distortion. The resulted bias in the measurement of misallocation cannot be unambiguously signed in theory.

Keywords: Capacity utilization; Misallocation; Measurement error (search for similar items in EconPapers)
JEL-codes: E22 L11 O47 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:214:y:2022:i:c:s0165176522000775

DOI: 10.1016/j.econlet.2022.110410

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