CAPACITY UTILISATION IN THE LONG RUN: SOME FURTHER CONSIDERATIONS

The variability of long-run capacity utilisation has to be consideredas an expression of the determining role played by aggregatedemand in the process of growth. This paper discusses the modelproposed by Serrano in which such a determining role is apparentlyreconciled with the condition of normal utilisation of existingcapacity in the long run. It is shown that Serrano's conclusionslie on the hypothesis of the constancy of the growth rate ofautonomous demand, an assumption which seems to originate froman erroneous interpretation of the property of ‘relativepersistence’ of ‘normal’ magnitudes. The paperargues that if that assumption is abandoned, the autonomy ofaggregate demand necessarily shows itself through the variabilityof capacity utilisation in the long run as well as in the shortrun.