In a recent contribution, Nikiforos (Nikiforos, M. 2016. On the utilisation controversy: a theoretical and empirical discussion of the Kaleckian model of growth and distribution, Cambridge Journal of Economics, vol. 40, no. 2, 437–67) has claimed that the FED data on capacity utilisation are stationary by construction, and thus, not suitable to test the Neo-Kaleckian model. He then proceeds to provide new series on capital utilisation, which he claims are non-stationary and provide, supposedly, support for the Neo-Kaleckian model. This comment presents two interrelated claims. First, the measurement error that Nikiforos claims to be I(1) in the FED series is I(0), and what is measured with error is only the level of the series. Thus, this series is suitable to test the Neo-Kaleckian model. Secondly, he does not provide unit root tests for the series he suggests as superior to the FED. When this exercise is carried out, almost all unit root tests decidedly reject the existence of a stochastic trend on his three proposed series, which, according to the author, do not lend support to the Neo-Kaleckian model. We conclude that measures of capacity utilisation based on FRB data are a reasonable source to test the implications of a wide variety of macroeconomic models.

In a quarterly unbalanced panel of 24 developed and developing countries, direct survey measures of capacity utilisation rates are stationary, positively correlated with growth in the short run and uncorrelated with growth in the long run. We show how these stylised facts are related to the 'convergence debate', i.e. the inability of actual capacity utilisation to converge to its normal or desired value in the long-run: In the baseline Neo-Kaleckian model, while trend capacity utilisation is not restricted, it should be positively correlated with growth in the long-run; in contrast, the Sraffian Supermultiplier where capacity utilisation converges to its long-run exogenous value implies utilisation is stationary and uncorrelated with growth in the long-run. Although both models' empirical predictions in the short-run are confirmed, our results reject the baseline Neo-Kaleckian model in favor of the Sraffian Supermultiplier in the long-run .

Recent contributions have mentioned the possibility of a declining trend in capacity utilization in the US since the 1970s. However, no consensus has emerged on the empirical evidence. The aim of this paper is to identify if such a declining trend in capacity utilization exists in the US economy: New empirical evidence is shown confirming that this is the case, at least since 1989.

No abstract