An Analysis of Time-Series Estimates of Capacity Utilization

The Federal Reserve's capacity utilization series constitute an important indicator of resource utilization. Because capacity is difficult to measure, this paper considers time-series alternatives. All that is needed to estimate the permanent component is an IP index. The time-series measures have the advantage of being consistently measured over time and easily reproducible. The FRB series are evaluated relative to the alternatives in terms of their ability to explain and predict inflation. The alternatives generally perform as well or better than the FRB series in these tests.

[1]  C. Nelson,et al.  Trends and random walks in macroeconmic time series: Some evidence and implications , 1982 .

[2]  E. Koenig.  Capacity utilization as a real-time predictor of manufacturing output , 1996 .

[3]  Gordon C. Winston,et al.  The Theory of Capital Utilization and Idleness. , 1974 .

[4]  R. Lucas.  Capacity, Overtime, and Empirical Production Functions , 1970 .

[5]  Thomas F. Cooley,et al.  The cyclical behavior of prices , 1991 .

[6]  Richard D. Raddock.  Industrial Production and Capacity Utilization: A Revision , 1995 .

[7]  Gary Solon,et al.  Shift work and the business cycle , 1993 .

[8]  G. Perry.  Capacity in Manufacturing , 1973 .

[9]  Gary Koop,et al.  Do recessions permanently change output , 1993 .

[10]  M. Baily,et al.  Workers, Jobs, and Inflation , 1983 .

[11]  G. Hansen.  Indivisible Labor and the Business Cycle , 1985 .

[12]  R. Gordon.  Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment , 1981 .

[13]  W. Hogan.  Some New Results in the Measurement of Capacity Utilization , 1969 .

[14]  F. Canova.  Detrending and business cycle facts , 1998 .

[15]  P. Perron,et al.  Trends and random walks in macroeconomic time series : Further evidence from a new approach , 1988 .

[16]  E. Prescott,et al.  Postwar U.S. Business Cycles: An Empirical Investigation , 1997 .

[17]  Sergio Rebelo,et al.  Low Frequency Filtering And Real Business Cycles , 1993 .

[18]  Martin Eichenbaum,et al.  Unit Roots in Real Gnp: Do We Know, and Do We Care? , 1989 .

[19]  Finn E. Kydland,et al.  Business cycles: real facts and a monetary myth , 1990 .

[20]  J. Stock,et al.  Interpreting Evidence on Money-Income Causality , 1987 .

[21]  Lawrence R. Klein,et al.  Capacity Utilization: Concept, Measurement, and Recent Estimates , 1973 .

[22]  Robert J. Gordon,et al.  Understanding Inflation in the 1980s , 1985 .

[23]  James M. Nason,et al.  Effects of the Hodrick-Prescott filter on integrated time series , 1991 .

[24]  R. Gordon.  The Role of Wages in the Inflation Process , 1991 .

[25]  E. Prasad,et al.  Interpreting the Cyclical Behavior of Prices , 1993 .

[26]  Robert J. Gordon,et al.  The Jobless Recovery: Does it Signal a New Era of Productivity-Led Growth? , 1993 .

[27]  Finn E. Kydland,et al.  Time to Build and Aggregate Fluctuations , 1982 .

[28]  R. Lucas.  UNDERSTANDING BUSINESS CYCLES , 1977 .