TY  - JOUR
AU  - Burnside,Craig
AU  - Eichenbaum,Martin
AU  - Rebelo,Sergio
TI  - Capital Utilization and Returns to Scale
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5125
PY  - 1995
Y2  - May 1995
UR  - http://www.nber.org/papers/w5125
L1  - http://www.nber.org/papers/w5125.pdf
N1  - Author contact info:
Craig Burnside
Department of Economics
Duke University
213 Social Sciences Building
Durham, NC 27708-0097
Tel: 919/660-1808
Fax: 919/684-8974
E-Mail: craig.burnside@duke.edu

Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu

Sergio Rebelo
Northwestern University
Kellogg School of Management
Department of Finance
Leverone Hall
Evanston, IL  60208-2001
Tel: 847/467-2329
Fax: 847/491-5719
E-Mail: s-rebelo@northwestern.edu
M1  - published as Craig Burnside, Martin Eichenbaum, Sergio Rebelo. "Capital Utilization and Returns to Scale," in Ben S. Bernanke and Julio J. Rotemberg, eds., "NBER Macroeconomics Annual 1995, Volume 10" MIT Press (1995)

AB  - This paper studies the implications of procyclical capital utilization rates for inference regarding cyclical movements in labor productivity and the degree of returns to scale.  We organize our investigation around five questions that we study using a measure of capital services based on electricity consumption: (1) Is the phenomenon of near or actual short run increasing returns to labor (SRIRL) an artifact of the failure to accurately measure capital utilization rates?  (2) Can we find a significant role for capital services in aggregate and industry level production technologies?  (3) Is there evidence against the hypothesis of constant returns to scale? (4) Can we reject the notion that the residuals in our estimated production functions represent technology shocks?  (5) How does correcting for cyclical variations in capital services affect the statistical properties of estimated aggregate technology shocks?  The answer to the first two questions is: yes.  The answer to the third and fourth questions is: no.  The answer to the fifth question is: a lot.
ER  -