The (Normal) Rate of Capacity Utilization at the Firm Level

Abstract

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Growth with Unused Capacity and Endogenous Capital Depreciation

“…Lavoie (, ) and Dutt () introduce the notion of expected rate of growth and argue that, in such a way, it is possible to ensure a stable long‐period equilibrium solution. Nikiforos (, ) criticizes these positions and proposes his own explanation of the endogeneity of the normal degree of utilization, which is based on the assumption of returns to scale that increase at a diminishing rate…”

Normal utilization as the adjusting variable in Neo‐Kaleckian growth models: A critique

“…Some recent contributions, however, have proposed new (non‐conventionalist) foundations for the convergence of the normal utilization rate to its current, actual value (Dávila‐Fernández, Oreiro, & Punzo, ; Nikiforos, ). This approach relies on a microeconomic model in which firms minimize costs under (a particular type of) increasing returns to scale (Nikiforos, ). Specifically, the model would imply a positive effect of the firm's output level on the firm's desired utilization rate.…”

Inconsistency and over‐determination in neo‐Kaleckian growth models: A note

“…Conversely, recent developments on production theory have showed that cost minimizing firms increase the utilization rate of their capital if the rate of returns to scale decreases as production increases, that is, the normal rate of utilization is endogenous to variations in demand (Nikiforos ). In the light of such recent contributions, this note also suggests that endogeneizing normal capacity utilization is a more appealing alternative.…”