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Regulating Rates of Return Do Gravitate in US Manufacturing!
Author(s) -
Tescari Stefania,
Vaona Andrea
Publication year - 2014
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12043
Subject(s) - depreciation (economics) , capital (architecture) , economics , rate of return , vintage , production (economics) , return of capital , monetary economics , microeconomics , capital formation , return on investment , finance , financial capital , investment performance , profit (economics) , archaeology , history
In this paper we test for the gravitation of regulating return rates, namely those return rates yielded by capital goods incorporating the best methods of production. We define them within a vintage capital model taking into consideration capacity utilization, capital depreciation and wages of workers using past capital vintages. We consider two data sets regarding US manufacturing activities and we find that gravitation does take place. Our results are contrasted with those of the previous literature. Research and policy implications are discussed.