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A Method For Improved Capital Measurement By Combining Accounts And Firm Investment Data

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  • Arvid Raknerud
  • Dag Rønningen
  • Terje Skjerpen

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 not included in the data set. 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.

Suggested Citation

  • Arvid Raknerud & Dag Rønningen & Terje Skjerpen, 2007. "A Method For Improved Capital Measurement By Combining Accounts And Firm Investment Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(3), pages 397-421, September.
    • Handle: RePEc:bla:revinw:v:53:y:2007:i:3:p:397-421
    DOI: 10.1111/j.1475-4991.2007.00241.x
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    Cited by:

    1. Rolf Golombek & Arvid Raknerud, 2012. "Exit dynamics of start-up firms. Does profit matter?," Discussion Papers 706, Statistics Norway, Research Department.
    2. Elena Cefis & Cristina Bettinelli & Alex Coad & Orietta Marsili, 2022. "Understanding firm exit: a systematic literature review," Small Business Economics, Springer, vol. 59(2), pages 423-446, August.
    3. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2008. "Skill Composition: Exploring a Wage-based Skill Measure," Discussion Papers 531, Statistics Norway, Research Department.
    4. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2009. "Lumpy investments, factor adjustments, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 104-127, January.
    5. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2011. "The Importance Of Skill Measurement For Growth Accounting," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 293-305, June.
    6. Xi Chen & Tatiana Plotnikova, 2018. "The Measurement of Capital: Retrieving Initial Values from Panel Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 542-562, September.
    7. Dale-Olsen, Harald & Finseraas, Henning, 2019. "Linguistic Diversity and Workplace Productivity," IZA Discussion Papers 12621, Institute of Labor Economics (IZA).
    8. Møen, Jarle, 2018. "Corporate returns to subsidized R&D projects: Direct grants vs tax credit financing," Discussion Papers 2018/9, Norwegian School of Economics, Department of Business and Management Science.
    9. Rolf Golombek & Arvid Raknerud, 2005. "Exit Dynamics with Adjustment Costs," Discussion Papers 442, Statistics Norway, Research Department.
    10. Chen, Xi & Plotnikova, Tatiana, 2014. "Retrieving initial capital distributions from panel data," MPRA Paper 61154, University Library of Munich, Germany.
    11. Dale-Olsen, Harald & Finseraas, Henning, 2020. "Linguistic diversity and workplace productivity," Labour Economics, Elsevier, vol. 64(C).

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