NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Capital Utilization and Capital Accumulation: Theory and Evidence

Matthew D. Shapiro

NBER Working Paper No. 1900 (Also Reprint No. r0867)
Issued in April 1986
NBER Program(s):   EFG

A firm may acquire additional caoital input by purchasing new capital or by increasing the utilization of its current capital. The margin between capital accumulation and capital utilization is studied in a model of dynamic factor demand where the firm chooses capital, labor, and their rates of utilization. A direct measure of capital utilization --the workweek of capital--is incorporated into the theory and estimates. The estimates imply that capital stock is costly to adjust while the work week of capital is essentially costless to adjust. The estimated response of the capital stock to changes in its price and in the required rate of return is more rapid than found in other estimates.

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Document Object Identifier (DOI): 10.3386/w1900

Published: Shapiro, Matthew D. "Capital Utilization and Capital Accumulation: Theoryand Evidence," Journal of Applied Econometrics, Vol. 1, No. 3, (1986), pp. 211-234. citation courtesy of

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