On the (In-)stability and the Endogeneity of the Normal Rate of Capacity Utilization in a Post-Keynesian/Kaleckian ‘Monetary’ Distribution and Growth Model

Eckhard Hein

Chapter 17 in Money, Distribution Conflict and Capital Accumulation, 2008, pp 153-167 from Palgrave Macmillan

Abstract: Abstract The Kaleckian models of distribution and growth discussed so far have been criticized by some Neo-Marxian and Neo-Ricardian authors (Auerbach/Skott 1988; Committeri 1986), because the equilibrium rate of capacity utilization in these models may deviate permanently from firms’ target rate of utilization, the long-run ‘normal rate’, without any tendency to adjustment.17 This deviation seems to be inconsistent with the requirement that firms’ investment decisions should be based on expectations of some ‘normal rate’ of utilization with regard to new productive equipment. Therefore, firms are supposed to adjust productive capacity to demand in the long run, and capacity utilization should be equal to firms’ target rate of utilization in a ‘fully adjusted long-run position’.

Keywords: Monetary Policy; Central Bank; Inflation Rate; Real Interest Rate; Capacity Utilization (search for similar items in EconPapers)
Date: 2008
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Working Paper: On the (in-)stability and the endogeneity of the "normal" rate of capacity utilisation in a post-Keynesian/Kaleckian "monetary" distribution and growth model (2006)
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DOI: 10.1057/9780230595606_17

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