Productivity Growth and Capacity Utilization in the Australian Gold Mining Industry: A Short-Run Cost Analysis

Abstract

This paper uses a stochastic short-run translog cost function to estimate productivity growth, adjusted for capacity utilisation effects, in the Australian gold mining industry over the time period 1968/69-1994/95. Productivity growth is measured and adjusted for the changes in capacity utilisation. It is found that a large portion of the cost-measure (observed) productivity growth may be attributed to technological change. Changes in capacity utilisation are found to have insignificant impacts on productivity growth in the Australian gold mining industry. Biases from technological change and capacity utilisation are also analysed. Technological change is found to be labour-saving and energy and intermediate inputs-using, but neutrality of capacity utilization cannot be rejected.