Capital Utilization and Empirical Analysis

Abstract

« First understand what you are trying to do » is always a good maxim. It is particularly important when what you actually want is not immediately obvious. This seems especially true with discussions of capital utilization, the concept of which, particularly in empirical models, is not always clear. Certainly Bosworth and Westaway identify different dimensions to capital utilization that are used by economists and it is not obvious that either of these corresponds to everyday usage. The present discussion, therefore, is an attempt to be precise about notions of capital utilization in order at least to provide a framework within which one can analyse the concepts involved and consider what measures are appropriate for empirical work.