Growth, Capital Scrapping, and the Rate of Capacity Utilisation

Olivier Allain (olivier.allain@u-paris.fr) and Nicolas Canry (nicolas.canry@univ-paris1.fr)

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: The aim of this short article is to build a model in order to take into account capital scrapping (or bankruptcies) in an income distribution and growth model. The reason to introduce capital scrapping results from the intuition of some inconsistencies between theoretical predictions and empirical facts: the rate of capacity utilisation data often exhibit a greater stability than it is expected after reading theoretical models. We think that capital scrapping might contribute to stabilise the utilisation rate. The idea is as follows: an increase of the profit share implies a decrease of the rate of capacity utilisation which then involves a rise in capital scrapping (or in the rate of bankruptcies).

Keywords: Income distribution; Capital scrapping; Rate of Capacity Utilisation; Imperfect Competition; Growth (search for similar items in EconPapers)
Date: 2008-11-01
Note: View the original document on HAL open archive server: https://hal.science/hal-00355932
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Citations: View citations in EconPapers (3)

Published in 12th Workshop on the Research Network "Macroeconomic Policies", Nov 2008, Berlin, Germany

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Working Paper: Growth, Capital Scrapping, and the Rate of Capacity Utilisation (2008)
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