Capital Stock Estimation in Hungary: A Brief Description of Methodolgy and Results
AbstractThe capital stock in Hungary was estimated using two approaches: one based on the historical time series of investments and the other based on direct survey data. The two approaches resulted in significantly different levels of net capital stock estimations: the level estimated by cumulating investments is approximately 50 percent of the level calculated from the survey data. Although the historical investment series is considered to be less reliable, it was found that the investments-based estimation provides more acceptable results by international standards. During the estimation, several issues emerged that strongly relate to the transition process, and therefore have not been discussed in the “classical” literature on the capital stock. We found no reliable information on how to estimate the one-off depreciation of non-competitive capital assets that were activated before the 1990s and also found it difficult to give assumptions for the changes in service life before and after the transition period. However, the sensitivity analysis showed that the alternative assumptions lead to only slight differences in the estimated accumulation path of the capital stock, and consequently strengthened the hypothesis that our results were quite robust. We also made a crosscheck using the growth accounting framework, and found that the estimated capital stock generated a TFP dynamics that is in accordance with international experience.
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Bibliographic InfoPaper provided by Magyar Nemzeti Bank (the central bank of Hungary) in its series MNB Working Papers with number 2003/7.
Length: 28 pages
Date of creation: 2003
Date of revision:
capital stock; Hungary;
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