Capital utilization and retirement

Antoine Bonleu (), Gilbert Cette and Guillaume Horny

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Abstract: This empirical analysis assesses the determinants of firms' capital retirement. Particular attention is paid to the impact of the business cycle and the capital usage intensity. Compared to previous studies, we directly control for the capital utilization and disentangle the short-run mechanisms from the long-run ones. The analysis is carried out with an original and large firm-level dataset. The main results of the analysis may be summarized as follows: (i) the retirement rate increases during slowdowns and decreases during booms. This corresponds to a countercyclical capital retirement; (ii) the capital retirement rate increases with the capital usage intensity in the long run. This corresponds to a wear and tear effect, which is small compared to the countercyclical one; (iii) the capital retirement rate increases with the average age of capital; (iv) the profit rate and the wage cost per capita do not have a significant impact on the retirement rate.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

Published in Applied Economics, 2013, 45 (24), pp.3483-3494. ⟨10.1080/00036846.2012.720013⟩

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Related works:
Journal Article: Capital utilization and retirement (2013)
Working Paper: Capital Utilisation and Retirement (2011)
Working Paper: Capital Utilisation and Retirement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01500866

DOI: 10.1080/00036846.2012.720013

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