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Age-Efficiency and Replacement Requirements for Measures of Capital Services

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Abstract

Measures of capital input depend on assumptions that are typically made without clear direction from economic theory, such as the best method for incorporating the physical deterioration of assets into measures of capital stocks and capital services. Compared with alternative ageefficiency profiles that might be assumed, a geometric profile has the advantages of general applicability, internal consistency, ease of use in data construction, and most importantly its robust approximation to the physical deterioration of assets given the types and sources of data that are typically available to researchers for constructing such measures.

Suggested Citation

  • Matthew A. Andersen, 2018. "Age-Efficiency and Replacement Requirements for Measures of Capital Services," Review of Economics & Finance, Better Advances Press, Canada, vol. 13, pages 55-61, August.
    • Handle: RePEc:bap:journl:180305
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    More about this item

    Keywords

    Capital services; Age-efficiency profiles; Deterioration; Depreciation; Geometric profile;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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