On a dual measure of the utilization rate of capital

Abstract

The measurement of capital services remains one of the most difficult task for growth accountants despite the breakthrough developments made over the last four decades and, in particular, following the numerous suggestions made to correct the measure of capital services for changes in capacity utilization. Building upon the work of Berndt and Fuss [1], this paper attempts to contribute to the latter issue. Establishing a parallel with the labour input, the author derives a formal measure for the rate of capacity utilization of capital which is based on observable dual price variables.