On the ‘utilisation controversy’: a theoretical and empirical discussion of the Kaleckian model of growth and distribution

Michalis Nikiforos

Cambridge Journal of Economics, 2016, vol. 40, issue 2, 437-467

Abstract: 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.

Date: 2016
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