Growth, Capital Scrapping, and the Rate of Capacity Utilisation

Olivier Allain (1, 2) , Nicolas Canry (1)

1 CES - Centre d'économie de la Sorbonne
2 UPD5 - Université Paris Descartes - Paris 5

The aim of this short article is to build a model in order to take into account capital scrapping (or bankruptcies) in an income distribution and growth model. The reason to introduce capital scrapping results from the intuition of some inconsistencies between theoretical predictions and empirical facts: the rate of capacity utilisation data often exhibit a greater stability than it is expected after reading theoretical models. We think that capital scrapping might contribute to stabilise the utilisation rate. The idea is as follows: an increase of the profit share implies a decrease of the rate of capacity utilisation which then involves a rise in capital scrapping (or in the rate of bankruptcies).

Mots clés: Income distribution; Capital scrapping; Rate of Capacity Utilisation; Imperfect Competition; Growth

Domaines: Economies et finances

Olivier Allain, Nicolas Canry. Growth, Capital Scrapping, and the Rate of Capacity Utilisation. 12th Workshop on the Research Network "Macroeconomic Policies", Nov 2008, Berlin, Germany. ⟨hal-00355932⟩