Capital Stock Approximation using Firm Level Panel Data, A Modified Perpetual Inventory Approach
AbstractMany recent studies exploring conditional factor demand or factor substitution issues use firm level panel data. A considerable number of establishment panels contains no direct information on the capital input, necessary for production or cost function estimation. Incorrect measurement of capital leads to biased estimates and casts doubt on any inference on output elasticities or input substitution properties. The perpetual inventory approach, commonly used for long panels, is a method that attenuates these problems. In this paper a modified perpetual inventory approach is proposed. This method provides more reliable measures for capital input when short firm panels are used and no direct information on capital input is available. The empirical results based on a replication study of Addison et al. (2006) support the conclusion that modified perpetual inventory is superior to previous attempts in particular when fixed effects estimation techniques are used. The method thus makes a considerable number of recently established firm panels accessible to more sophisticated production function or factor demand analyses.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 228 (2008)
Issue (Month): 4 (August)
Contact details of provider:
Postal: Licher Straße 74, 35394 Gießen
Phone: +49 (0)641 99 22 001
Fax: +49 (0)641 99 22 009
Web page: http://wiwi.uni-giessen.de/home/oekonometrie/Jahrbuecher/
More information through EDIRC
Production function; capital input;
Find related papers by JEL classification:
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Achim Schmillen, 2011.
"The Exporter Wage Premium Reconsidered - Destinations, Distances and Linked Employer-Employee Data,"
111, Bavarian Graduate Program in Economics (BGPE).
- Achim Schmillen, 2011. "The Exporter Wage Premium Reconsidered Destinations, Distances and Linked Employer-Employee Data," Working Papers 305, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Winker).
If references are entirely missing, you can add them using this form.