Productivity Races II: The Issue of Capital Measurement
AbstractThis paper explores the role of capital measurement in determining the productivity of individual textile plants. In addition to gross book value of capital, we experiment with a perpetual inventory measure of capital and implicit (estimated) deflator associated with the age of the plant. Following the methodology of the earlier paper (Productivity Races I), we find that measures of productivity constructed from different measures of capital are highly correlated. Further, their association with alternative measures of economic performance is approximately the same. Nevertheless, the perpetual inventory measure of capital -- the most desirable measure from a theoretical perspective -- does consistently outperform the other two measures.
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Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 97-3.
Date of creation: Jan 1997
Date of revision:
CES; economic; research; micro; data; microdata; chief; economist;
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