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A Method for Improved Capital Measurement by Combining Accounts and Firm Investment Data. A revised version

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Author Info
Arvid Raknerud, Dag Rønningen and Terje Skjerpen (Statistics Norway)

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Abstract

We propose a new method for estimating capital stocks at the firm level by combining business accounts information and investment data. The method also produces capital estimates at the sector or industry level by summing individual firms' capital stocks and appropriately inflating this sum to account for firms with missing data. Our approach has two major advantages compared with the much used Perpetual Inventory Method (PIM). First, long investment series are not necessary. Second, sector capital estimates are automatically adjusted for changes in the capital stock because of entry and exit of firms. While capital growth rates in Norwegian manufacturing were only 1 percent on average during 1993--2004 according to national accounts figures, our method yields much higher growth rates of 5.5 percent on average.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 365.

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Date of creation: Apr 2007
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Handle: RePEc:ssb:dispap:365

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Related research
Keywords: Capital measurement Accounts data Firm panel data Net capital stocks Depreciation

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
M40 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - General

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References listed on IDEAS
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.:
  1. Klette, Tor Jakob & Griliches, Zvi, 1996. "The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Endogenous," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(4), pages 343-61, July-Aug.. [Downloadable!] (restricted)
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  2. Ellen R. McGrattan & James A. Schmitz, Jr., 1999. "Maintenance and repair: too big to ignore," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 2-13. [Downloadable!]
  3. Hulten, Charles R. & Wykoff, Frank C., 1981. "The estimation of economic depreciation using vintage asset prices : An application of the Box-Cox power transformation," Journal of Econometrics, Elsevier, vol. 15(3), pages 367-396, April. [Downloadable!] (restricted)
  4. Hicks, John R, 1974. "Capital Controversies: Ancient and Modern," American Economic Review, American Economic Association, vol. 64(2), pages 307-16, May. [Downloadable!] (restricted)
  5. Jorgenson, Dale W, 1996. "Empirical Studies of Depreciation," Economic Inquiry, Oxford University Press, vol. 34(1), pages 24-42, January.
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  6. Hulten, Charles R & Wykoff, Frank C, 1996. "Issues in the Measurement of Economic Depreciation: Introductory Remarks," Economic Inquiry, Oxford University Press, vol. 34(1), pages 10-23, January.
  7. Diewert, W E, 1980. "Capital and the Theory of Productivity Measurement," American Economic Review, American Economic Association, vol. 70(2), pages 260-67, May. [Downloadable!] (restricted)
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Cited by:
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  1. Øivind A. Nilsen, Arvid Raknerud, Marina Rybalka and Terje Skjerpen, 2005. "Lumpy Investments, Factor Adjustments and Productivity," Discussion Papers 441, Research Department of Statistics Norway. [Downloadable!]
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