Is capacity utilization variable in the long run? An agent-based sectoral approach to modeling hysteresis in the normal rate of capacity utilization

Post Keynesian macrodynamic models make various assumptions about the normal rate of capacity utilization. Those rooted in Classical and neo-Keynesian traditions assume is fixed, whereas Kaleckian treat it as a variable that endogenous to actual This paper contributes debate utilization by developing model strong or genuine hysteresis, which firms discrete decisions depending on degree uncertainty demand conditions. An agent-based based empirical analysis 25 sectors US economy used show hysteresis can cause variation within subset range observed rate. suggests exhibits both constancy (endogenous) variability over different ranges More broadly speaking, shown provide basis for synthesis macrodynamics draws Classical/neo-Keynesian modeling traditions.