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Direct and Indirect Measures of Capacity Utilization: A Nonparametric Analysis of U.S. Manufacturing

Subhash Ray, Kankana Mukherjee and Yanna Wu
Additional contact information
Yanna Wu: PricewaterhouseCoopers LLP

No 2005-36, Working papers from University of Connecticut, Department of Economics

Abstract: We measure the capacity output of a firm as the maximum amount producible by a firm given a specific quantity of the quasi-fixed input and an overall expenditure constraint for its choice of variable inputs. We compute this indirect capacity utilization measure for the total manufacturing sector in the US as well as for a number of disaggregated industries, for the period 1970-2001. We find considerable variation in capacity utilization rates both across industries and over years within industries. Our results suggest that the expenditure constraint was binding, especially in periods of high interest rates.

Keywords: Data envelopment analysis; expenditure constraint; indirect production function (search for similar items in EconPapers)
JEL-codes: D24 L6 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (3)

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Journal Article: DIRECT AND INDIRECT MEASURES OF CAPACITY UTILIZATION: A NON‐PARAMETRIC ANALYSIS OF US MANUFACTURING* (2006) Downloads
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