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Journal Article
A theory of the capacity utilization/inflation relationship
Discussion Paper
Energy price shocks, capacity utilization and business cycle fluctuations
This study focuses on the analysis of energy price shocks in the generation of business cycle phenomena. These shocks are transmitted through endogenous fluctuations in capital utilization. The production structure of the model gives rise to an empirical measure of true technology growth that is exempt from recent criticisms levelled at the standard measure, i.e., Solow residual growth. The model is calibrated and evaluated for the U.S. economy using annual data over the 19601988 period. At business cycle frequencies, the model accounts for 7491 percent of the volatility of U.S. output; ...
Journal Article
Is all government capital productive?
Journal Article
Is \\"high\\" capacity utilization inflationary?
Working Paper
Variance properties of Solow's productivity residual and their cyclical implications
For the United States economy (1960-1989), the correlation between the growth rates of the Solow residual and the real price of energy (government spending) is -0.55 (0.09). The Solow residual confounds movements in energy prices and government spending with those in true technology. Why? To address this question, this study develops a model to see if it quantitatively captures the endogenous transmission mechanism underlying the observed Solow residual correlations. It does. The transmission mechanism depends on endogenous capital utilization. With this transmission mechanism in place, and ...