On the empirical content of the convergence debate: Cross country evidence on growth and capacity utilisation

Santiago Gahn () and Alejandro González
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Santiago Gahn: Niccolò Cusano University (IT)

No PKWP1922, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: In a quarterly unbalanced panel of 24 developed and developing countries, direct survey measures of capacity utilisation rates are stationary, positively correlated with growth in the short run and uncorrelated with growth in the long run. We show how these stylised facts are related to the `convergence debate', i.e. the inability of actual capacity utilisation to converge to its normal or desired value in the long-run: In the baseline Neo-Kaleckian model, while trend capacity utilisation is not restricted, it should be positively correlated with growth in the long-run; in contrast, the Sraffian Supermultiplier where capacity utilisation converges to its long-run exogenous value implies utilisation is stationary and uncorrelated with growth in the long-run. Although both models' empirical predictions in the short-run are confirmed, our results reject the baseline Neo-Kaleckian model in favor of the Sraffian Supermultiplier in the long-run.

Keywords: Neo-Kaleckian model; Supermultiplier; Capacity Utilisation; Stationary (search for similar items in EconPapers)
JEL-codes: C22 E11 (search for similar items in EconPapers)
Pages: 37
Date: 2019-12
New Economics Papers: this item is included in nep-hme, nep-mac and nep-ore
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: On the empirical content of the convergence debate: Cross‐country evidence on growth and capacity utilisation (2022)
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