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Journal of Economic Perspectives: Vol. 11 No. 1 (Winter 1997)
JEP Volume. 11, Issue 1 | 
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Capacity Utilization
Article Citation
Corrado, Carol, and
Joe Mattey. 1997. "Capacity Utilization."
Journal of Economic Perspectives,
11(1): 151-167.
DOI: 10.1257/jep.11.1.151
DOI: 10.1257/jep.11.1.151
Abstract
This article reviews how the Federal Reserve measures capacity utilization and explains why capacity utilization has been, and likely will remain, a useful indicator of inflationary pressures and business cycle fluctuations. The authors also explain why economic developments, such as the pace of technological change, increased international trade, and a shift in the share of the workforce to service-producing industries, have not substantially affected the indicator value of capacity utilization. A microtheoretic description of the concept of capacity utilization is offered. Evidence on the plausibility of microeconomic structural interpretations of the relation between capacity utilization and price changes is reviewed.
Article Full-Text Access
Full-text Article (Complimentary)
Authors
Corrado, Carol (Federal Reserve System)
Mattey, Joe (Federal Reserve Bank of San Francisco)
Mattey, Joe (Federal Reserve Bank of San Francisco)
JEL Classifications
E22: Capital; Investment; Capacity
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