The Capital-Output Ratio in the United States: Its Variation and Stability

Abstract

If only a decade ago the demand for capital coefficients greatly exceeded the supply, recent empirical findings have rectified, if not reversed, the imbalance. Produced by Leontief and his associates in the Harvard Economic Research Project’s dynamic input-output model on the one side, and by Kuznets and his associates in the National Bureau of Economic Research study of capital formation on the other, American capital coefficients are now reaching the market in such variety and numbers as to make the exercise of their consumers’ choice a fascinating, if not an easy, occupation. It seems that the days of the good old general capital coefficient which could be so conveniently divided into the propensity to save to yield the warranted, required, equilibrium, or some other rate of growth are about over. A present-day American fisherman who is happy to have a box of modern flies each for a particular type of water, fish, season and even hour, may yet be nostalgic for the old-fashioned earthworm good for almost any kind of fish at any time. Similarly, the user of these coefficients must be grateful for the vast and useful amount of research done, and at the same time not quite certain how to pick the right coefficient for the right problem. Fortunately, in some instances the trends are so pronounced that the choice does not matter; but in others it does.