How fast do personal computers depreciate? concepts and new estimates
AbstractThis paper provides new estimates of depreciation rates for personal computers using an extensive database of prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect, where the latter effect is driven by the steep ongoing drop in the constant-quality prices of newly-introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPAs) and were incorporated into the December 2003 comprehensive NIPA revision. Regarding tax policy, our estimates suggest that the current tax depreciation schedule for PCs closely tracks the actual loss of value in a zero-inflation environment. However, because the tax code is not indexed for inflation, the tax allowances would be too small in present value for inflation rates above the very low level now prevailing.
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.
Bibliographic InfoPaper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2004-31.
Date of creation: 2004
Date of revision:
Other versions of this item:
- Mark E. Doms & Wendy F. Dunn & Stephen D. Oliner & Daniel E. Sichel, 2004. "How Fast do Personal Computers Depreciate? Concepts and New Estimates," NBER Chapters, in: Tax Policy and the Economy, Volume 18, pages 37-80 National Bureau of Economic Research, Inc.
- Mark E. Doms & Wendy E. Dunn & Stephen D. Oliner & Daniel E. Sichel, 2004. "How Fast Do Personal Computers Depreciate? Concepts and New Estimates," NBER Working Papers 10521, National Bureau of Economic Research, Inc.
- Mark E. Doms & Wendy E. Dunn & Stephen D. Oliner & Daniel E. Sichel, 2003. "How fast do personal computers depreciate? concepts and new estimates," Working Paper Series 2003-20, Federal Reserve Bank of San Francisco.
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-09 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ernst R. Berndt & Neal J. Rappaport, 2001. "Price and Quality of Desktop and Mobile Personal Computers: A Quarter-Century Historical Overview," American Economic Review, American Economic Association, vol. 91(2), pages 268-273, May.
- Alan J. Auerbach, 1980.
"Tax Neutrality and the Social Discount Rate: A Suggested Framework,"
NBER Working Papers
0457, National Bureau of Economic Research, Inc.
- Auerbach, Alan J., 1982. "Tax neutrality and the social discount rate : A suggested framework," Journal of Public Economics, Elsevier, vol. 17(3), pages 355-372, April.
- Jane G. Gravelle, 1994. "The Economic Effects of Taxing Capital Income," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071584, December.
- Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
- Mirko Draca & Raffaella Sadun & John Van Reenen, 2006.
"Productivity and ICT: a review of the evidence,"
LSE Research Online Documents on Economics
4561, London School of Economics and Political Science, LSE Library.
- Alice Albonico & Sarantis Kalyvitis & Evi Pappa, .
"Capital Maintenance and Depreciation over the Business Cycle,"
DEOS Working Papers
1326, Athens University of Economics and Business.
- Albonico, Alice & Kalyvitis, Sarantis & Pappa, Evi, 2014. "Capital maintenance and depreciation over the business cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 273-286.
- Michael J. Geske & Valerie A. Ramey & Matthew D. Shapiro, 2007.
"Why Do Computers Depreciate?,"
in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 121-150
National Bureau of Economic Research, Inc.
- Jason G. Cummins, 2004.
"A new approach to the valuation of intangible capital,"
Finance and Economics Discussion Series
2004-17, Board of Governors of the Federal Reserve System (U.S.).
- Jason G. Cummins, 2005. "A New Approach to the Valuation of Intangible Capital," NBER Chapters, in: Measuring Capital in the New Economy, pages 47-72 National Bureau of Economic Research, Inc.
- Jason G. Cummins, 2003. "A New Approach to the Valuation of Intangible Capital," NBER Working Papers 9924, National Bureau of Economic Research, Inc.
- Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2007.
"Americans Do I.T. Better: US Multinationals and the Productivity Miracle,"
NBER Working Papers
13085, National Bureau of Economic Research, Inc.
- Nicholas Bloom & Raffaella Sadun & John Van Reenen, 2012. "Americans Do IT Better: US Multinationals and the Productivity Miracle," American Economic Review, American Economic Association, vol. 102(1), pages 167-201, February.
- Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans do I.T. better: US multinationals and the productivity miracle," LSE Research Online Documents on Economics 4555, London School of Economics and Political Science, LSE Library.
- Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEP Discussion Papers dp0788, Centre for Economic Performance, LSE.
- Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEPR Discussion Papers 6291, C.E.P.R. Discussion Papers.
- John Hassler & Per Krusell & Kjetil Storesletten & Fabrizio Zilibotti, 2007.
"On the Optimal Timing of Capital Taxes,"
IEW - Working Papers
343, Institute for Empirical Research in Economics - University of Zurich.
- Antonopoulos, Christos & Sakellaris, Plutarchos, 2009. "The contribution of Information and Communication Technology investments to Greek economic growth: An analytical growth accounting framework," Information Economics and Policy, Elsevier, vol. 21(3), pages 171-191, August.
- Mark C. Doms, 2004. "The boom and bust in information technology investment," Economic Review, Federal Reserve Bank of San Francisco, pages 19-34.
- Andreas Hornstein, 2004. "(Un)balanced growth," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 25-45.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kris Vajs).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.