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Measurement of Capacity Depreciation Based on Engineering Data

Author

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  • John B. Penson
  • Dean W. Hughes
  • Glenn L. Nelson

Abstract

The widely used estimates of annual capacity depreciation for selected types of farm producer capital published by the US DA rest on the assumption that the amount of capital consumed annually equals a constant fraction of the existing capital stocks. This study demonstrates, through the use of agricultural engineering data, that the productive capacity of farm tractors deteriorates in a concave rather than the convex pattern suggested by present USDA estimates. The implications for studies estimating aggregate production functions based on factor shares or farm investment demand equations are discussed. Finally, recommendations for change to selected sector economic accounts are made.

Suggested Citation

  • John B. Penson & Dean W. Hughes & Glenn L. Nelson, 1977. "Measurement of Capacity Depreciation Based on Engineering Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(2), pages 321-329.
    • Handle: RePEc:oup:ajagec:v:59:y:1977:i:2:p:321-329.
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    File URL: http://hdl.handle.net/10.2307/1240022
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    Cited by:

    1. Andersen, Matthew A. & Alston, Julian M., 2004. "A Comparison Of Capital Measures In U.S. Agriculture," 2004 Annual meeting, August 1-4, Denver, CO 20153, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Unknown, 1994. "Evaluating Agricultural Research And Productivity In An Era Of Resource Scarcity," Staff Papers 14039, University of Minnesota, Department of Applied Economics.
    3. San Juan, Carlos & Ball, V. Eldon & Butault, Jean-Pierre & Nehring, Richard, 2015. "Real Capital Input in OECD Agriculture: A Multinational Comparison," UC3M Working papers. Economics we1501, Universidad Carlos III de Madrid. Departamento de Economía.
    4. Vanzetti, David & Quiggin, John C., 1985. "A Comparative Analysis Of Agricultural Tractor Investment Models," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 29(2), pages 1-20, August.
    5. Chen, Dean T. & Penson, John B. & Teboh, Jacob F., 1988. "The Implicit Revenue Function Approach to Farm Program Analysis," Staff Reports 257912, Texas A&M University, Agricultural and Food Policy Center.
    6. Ball, V. Eldon & Butault, Jean-Pierre & Nehring, Richard, 2001. "U.S. Agriculture, 1960-96 A Multilateral Comparison of Total Factor Productivity," Technical Bulletins 184330, United States Department of Agriculture, Economic Research Service.
    7. Hardin, Erin M. & Penson, John B., 2017. "Ability to Pay and Agriculture Sector Stability," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252829, Southern Agricultural Economics Association.
    8. National Resource Economics Division, Economics, Statistics, and Cooperatives Service, 1979. "Natural Resource Capital in U.S. Agriculture: Irrigation, Drainage and Conservation Investments Since 1900," Economics Statistics and Cooperative Services (ESCS) Reports 329202, United States Department of Agriculture, Economic Research Service.
    9. Virgil Eldon Ball & Carlos San Juan Mesonada & Carlos Sunyer Manteiga & Kennet Ericson & Yu Sheng, 2023. "Technology catch‐up in agriculture among advanced economies," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 18-37, January.
    10. V. Eldon Ball & W. A. Lindamood & Richard Nehring & Carlos San Juan Mesonada, 2008. "Capital as a factor of production in OECD agriculture: measurement and data," Applied Economics, Taylor & Francis Journals, vol. 40(10), pages 1253-1277.
    11. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.
    12. Penson, John B., Jr., 1977. "External Finance: A Necessary Component In Growth Projections For Southern Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 9(1), pages 1-9, July.
    13. Hassler, John & Krusell, Per & Storesletten, Kjetil & Zilibotti, Fabrizio, 2008. "On the optimal timing of capital taxes," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 692-709, May.
    14. Unknown, 1980. "Measurement of U.S. Agricultural Productivity: A Review of Current Statistics and Proposals for Change," Technical Bulletins 157718, United States Department of Agriculture, Economic Research Service.
    15. 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.
    16. Penson, John B. & Taylor, C. Robert, 1990. "Modeling the Interface Between Agriculture and the General Economy," Working Papers 258042, Texas A&M University, Agricultural and Food Policy Center.
    17. Marais, S. J. L., 1983. "Determining Depreciation In Agriculture In Inflationary Conditions," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 22(1), April.
    18. Penson, John B., Jr., 1977. "Response - External Finance: A Necessary Component In Growth Projections For Southern Agriculture," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 9(1), pages 1-3, July.
    19. Ball, V. Eldon & Nehring, Richard & Mesonada, Carlos San Juan & Sheng, Yu, 2016. "Comparisons of Real Values of Capital Input," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235914, Agricultural and Applied Economics Association.
    20. Eldon V Ball & Sun L Wang & Richard Nehring & Roberto Mosheim, 2016. "Productivity and Economic Growth in U.S. Agriculture: A New Look," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(1), pages 30-49.
    21. Ahearn, Mary Clare & Yee, Jet & Ball, V. Eldon & Nehring, Richard F., 1998. "Agricultural Productivity in the United States," Agricultural Information Bulletins 33687, United States Department of Agriculture, Economic Research Service.
    22. Knutson, Ronald D. & Richardson, James W. & Smith, Edward G. & Rister, M. Edward & Grant, Warren R. & Lippke, Lawrence A. & Israelsen, Craig L., 2002. "Economic Impacts of Farm Program Payment Limits," Working Papers 42717, Texas A&M University, Agricultural and Food Policy Center.
    23. Yu Sheng & V. Eldon Ball & Kenneth Erickson & Carlos San Juan Mesonada, 2022. "Cross-country agricultural TFP convergence and capital deepening: evidence for induced innovation from 17 OECD countries," Journal of Productivity Analysis, Springer, vol. 58(2), pages 185-202, December.
    24. Penson, John B. & Chen, Dean T., 1988. "Design and Application of a Structural General Equilibrium Model to Farm Policy Analysis," Staff Reports 257926, Texas A&M University, Agricultural and Food Policy Center.
    25. Nehring, Richard F. & Vialou, Alexandre & Erickson, Kenneth W. & Sandretto, Carmen L., 2008. "Assessing Economic and Environmental Impacts of Ethanol Production on Fertilizer Use in Corn Production," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6736, Southern Agricultural Economics Association.

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