The 1989 Change in the Definition of Capacity: A Plant-Level Perspective
June 2000
Working Paper Number:
CES-00-09
Abstract
The Survey of Plant Capacity (SPC) is the primary source of data used to construct the Federal Reserve's manufacturing utilization rates. A major restructuring of the SPC in 1989 presents a potential obstacle to constructing measures of utilization that are consistent over time. The object of this study is to take advantage of plant-level data that is available at the Census Bureau's O'ce of the Chief Economist to thoroughly reexamine the link between the historical and current measures of capacity. The preponderance of evidence in this study suggests that preferred utilization is consistent with \full" utilization and, therefore, supports the underlying Federal Reserve methodology for estimating capacity utilization.
Document Tags and Keywords
Keywords
Keywords are automatically generated using KeyBERT, a powerful and innovative
keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant
keywords.
By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the
text, highlighting the most significant topics and trends. This approach not only enhances searchability but
provides connections that go beyond potentially domain-specific author-defined keywords.
:
Tags
Tags are automatically generated using a pretrained language model from spaCy, which excels at
several tasks, including entity tagging.
The model is able to label words and phrases by part-of-speech,
including "organizations." By filtering for frequent words and phrases labeled as "organizations", papers are
identified to contain references to specific institutions, datasets, and other organizations.
:
Similar Working Papers
Similarity between working papers are determined by an unsupervised neural
network model
know as Doc2Vec.
Doc2Vec is a model that represents entire documents as fixed-length vectors, allowing for the
capture of semantic meaning in a way that relates to the context of words within the document. The model learns to
associate a unique vector with each document while simultaneously learning word vectors, enabling tasks such as
document classification, clustering, and similarity detection by preserving the order and structure of words. The
document vectors are compared using cosine similarity/distance to determine the most similar working papers.
Papers identified with 🔥 are in the top 20% of similarity.
The 10 most similar working papers to the working paper 'The 1989 Change in the Definition of Capacity: A Plant-Level Perspective' are listed below in order of similarity.
-
Working PaperPublic Disclosure of Private Information as a Tool for Regulating Environmental Emissions: Firm-Level Responses by Petroleum Refineries to the Toxics Release Inventory
October 2005
Working Paper Number:
CES-05-13
I investigate whether, as is commonly believed -- and if so how -- firm disclosure of so-called "toxic" releases, required since 1987 by the federal "Toxics Release Inventory ("TRI"), has brought about the reductions in toxic releases that have occurred since that time. Existing literature, consisting principally of event studies of stock market returns, suggest that dirty firms experience abnormal negative returns. Using a micro-level data set that links TRI releases to plant level Census data for petroleum refineries, I study plant-level behavior, exploiting state variation in toxics regulations, and exploring the relationship between TRI releases and concomitant regulation of non-toxic pollutants. I find that, although TRI induced public disclosure may have contributed to the decline in reported toxic releases, that alone has not been the cause of those reductions: the evidence is strong that changes in toxic emission intensity are a byproduct of more traditional command and control regulation of emissions of non-toxic pollutants. I find that (1) since 1987, refineries have become substantially cleaner in terms of over-all toxic releases; (2) the clean-up has not occurred through substitution away from TRI listed substances as inputs or alteration in the mix of outputs; and (3) refineries in states with more stringent supplemental regulation of toxics (e.g. with specific state-wide goals for toxic reductions) have significantly lower toxic emission intensity levels than refineries in other states. I find also that (4) TRI air releases are highly correlated with levels of criteria air pollution; (5) both toxic pollution levels and intensity fall with increases in pollution abatement (operating and maintenance) expenditures for non-toxic air pollution; and (6) TRI air releases are affected by being in more stringent regulatory regions for the criteria air pollutants. Finally, I link my data-set with CRSP data to re-evaluate the effect of TRI reporting on company stock market valuation, correcting for a methodological shortcoming (stemming from the fact that all reporting firms face a common event window) of prior event studies of the impact of the TRI. Correcting for that shortcoming, I find that (7) the evidence of negative abnormal returns around TRI reporting dates for petroleum companies is not significant. My findings suggest that the most probable mechanism through which TRI reporting may induce firms to clean up is local and state governmental use of TRI disclosures. They suggest also not only that the perceived effectiveness of TRI regulation has been overstated, but perhaps more importantly that the benefits of command and control regulation of non-toxic pollutants have been underestimated.View Full Paper PDF
-
Working PaperOutsourcing Business Service and the Scope of Local Markets
August 2000
Working Paper Number:
CES-00-14
This paper examines outsourcing to test whether productivity-enhancing specialization is facilitated in bigger cities. First, the paper provides a theoretical model which shows that greater local demand for a given input promotes the entry of suppliers into a city; the increased number of suppliers then results in lower outsourcing prices and a higher use of outsourcing by final producers, therefore reducing the final producers' production costs. I then test the predictions of the model by examining manufacturing plants' practices of outsourcing business services, by using plant-level data from the 1992 Annual Survey of Manufactures. The empirical results show that an exogenous increase in local demand promotes the entry of service suppliers and increases a firm's probability of outsourcing for white-collar services. In particular, I found that doubling the intensity of the use of a service in a U.S. county, which can be attributed to the industrial composition of the county, results in a 7% to 25% increase in the probability of outsourcing.View Full Paper PDF
-
Working PaperLong-Run Expectations And Capacity
April 1988
Working Paper Number:
CES-88-01
In this paper, we argue at a general level, that recent economic models of capacity and of its utilization are deficient because they do not adequately take into account firms' long-run expectations about conditions which are pertinent to their investment decisions, i.e., their decisions about altering productive capacity. We argue that the problem with these models is that they rely on the two conventional definitions of capacity which ignore these long-run expectations. Accordingly, we propose a third definition of capacity which incorporates these expectations and, thereby, corrects the problem. Furthermore, we argue that a correct, empirical analysis with the proposed definition -- indeed, any credible analysis of capacity or its utilization -- must take into account the demand for the output produced by the firms being studied. Finally, we apply the definition to clarify the meaning of surveys of capacity and, thus, show how it can be used to improve future surveys of capacity.View Full Paper PDF
-
Working PaperOutsourcing Business Service and the Scope of Local Markets
December 2001
Working Paper Number:
CES-01-15
This paper examines outsourcing to test whether productivity-enhancing specialization is facilitated in bigger cities. First, the paper provides a theoretical model which shows that greater local demand for a given input promotes the entry of suppliers into a city; the increased number of suppliers then results in lower outsourcing prices and a higher use of outsourcing by final producers, therefore reducing the final producers' production costs. I then test the predictions of the model by examining manufacturing plants' practices of outsourcing business services, by using plant-level data from the 1992 Annual Survey of Manufactures. The empirical results show that an exogenous increase in local demand promotes the entry of service suppliers and increases a firm's probability of outsourcing for white-collar services. In particular, I found that doubling the intensity of the use of a service in a U.S. county, which can be attributed to the industrial composition of the county, results in a 7% to 25% increase in the probability of outsourcing.View Full Paper PDF
-
Working PaperUsing the Survey of Plant Capacity to Measure Capital Utilization
July 2011
Working Paper Number:
CES-11-19
Most capital in the United States is idle much of the time. By some measures, the average workweek of capital in U.S. manufacturing is as low as 55 hours per 168 hour week. The level and variability of capital utilization has important implications for understanding both the level of production and its cyclical fluctuations. This paper investigates a number of issues relating to aggregation of capital utilization measures from the Survey of Plant Capacity and makes recommendations on expanding and improving the published statistics deriving from the Survey of Plant Capacity. The paper documents a number of facts about properties of capital utilization. First, after growing for decades, capital utilization started to fall in mid 1990s. Second, capital utilization is a useful predictor of changes in capacity utilization and other factors of production. Third, adjustment of productivity measures for variable capital utilization improves statistical and economic properties of these measures. Fourth, the paper constructs weights to aggregate firm level capital utilization rates to industry and economy level, which is the major enhancement to available data.View Full Paper PDF
-
Working PaperModelling Technical Progress And Total Factor Productivity: A Plant Level Example
October 1988
Working Paper Number:
CES-88-04
Shifts in the production frontier occur because of changes in technology. A model of how a firm learns to use the new technology, or how it adapts from the first production frontier to the second, is suggested. Two different adaptation paths are embodied in a translog cost function and its attendant cost share equations. The paths are the traditional linear time trend and a learning curve. The model is estimated using establishment level data from a non-regulated industry that underwent a technological shift in the time period covered by the data. The learning curve resulted in more plausible estimates of technical progress and total factor productivity growth patterns. A significant finding is that, at the establishment level, all inputs appear to be substitutes.View Full Paper PDF
-
Working PaperThe Dynamics of Plant-Level Productivity in U.S. Manufacturing
July 2006
Working Paper Number:
CES-06-20
Using a unique database that covers the entire U.S. manufacturing sector from 1976 until 1999, we estimate plant-level total factor productivity for a large number of plants. We characterize time series properties of plant-level idiosyncratic shocks to productivity, taking into account aggregate manufacturing-sector shocks and industry-level shocks. Plant-level heterogeneity and shocks are a key determinant of the cross-sectional variations in output. We compare the persistence and volatility of the idiosyncratic plant-level shocks to those of aggregate productivity shocks estimated from aggregate data. We find that the persistence of plant level shocks is surprisingly low-we estimate an average autocorrelation of the plantspecific productivity shock of only 0.37 to 0.41 on an annual basis. Finally, we find that estimates of the persistence of productivity shocks from aggregate data have a large upward bias. Estimates of the persistence of productivity shocks in the same data aggregated to the industry level produce autocorrelation estimates ranging from 0.80 to 0.91 on an annual basis. The results are robust to the inclusion of various measures of lumpiness in investment and job flows, different weighting methods, and different measures of the plants' capital stocks.View Full Paper PDF
-
Working PaperThe Life Cycles of Industrial Plants
October 2001
Working Paper Number:
CES-01-10
The paper presents a dynamic programming model with multiple classes of capital goods to explain capital expenditures on existing plants over their lives. The empirical specification shows that the path of capital expenditures is explained by (a) complementarities between old and new capital goods, (b) the age of plants, (c) an index that captures the rate of technical change and (d) the labor intensiveness of a plant when it is newly born. The model is tested with Census data for roughly 6,000 manufacturing plants that were born after 1972.View Full Paper PDF
-
Working PaperEnergy Prices, Pass-Through, and Incidence in U.S. Manufacturing*
January 2016
Working Paper Number:
CES-16-27
This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are suffcient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We and that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups. This suggests that marginal cost pass-through is incomplete, with estimates centered around 0.7. Our confidence intervals reject both zero pass-through and complete pass-through. We and heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.View Full Paper PDF
-
Working PaperAutomation, Labor Share, and Productivity: Plant-Level Evidence from U.S. Manufacturing
September 2018
Working Paper Number:
CES-18-39
This paper provides new evidence on the plant-level relationship between automation, labor and capital usage, and productivity. The evidence, based on the U.S. Census Bureau's Survey of Manufacturing Technology, indicates that more automated establishments have lower production labor share and higher capital share, and a smaller fraction of workers in production who receive higher wages. These establishments also have higher labor productivity and experience larger long-term labor share declines. The relationship between automation and relative factor usage is modelled using a CES production function with endogenous technology choice. This deviation from the standard Cobb-Douglas assumption is necessary if the within-industry differences in the capital-labor ratio are determined by relative input price differences. The CES-based total factor productivity estimates are significantly different from the ones derived under Cobb-Douglas production and positively related to automation. The results, taken together with earlier findings of the productivity literature, suggest that the adoption of automation may be one mechanism associated with the rise of superstar firms.View Full Paper PDF
