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Capital stocks and capital services: integrated and consistent estimates for the United Kingdom, 1950–2013

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  • Oulton, Nicholas
  • Wallis, Gavin

Abstract

The evolution of capital services is crucial for understanding labour productivity growth. Capital stocks and the wealth–income ratio are important for understanding welfare and inequality. Accordingly, we present annual estimates of fixed capital services and capital stocks for the United Kingdom, 1950–2013, for the whole economy and for the market sector. Our estimates cover nine asset types including R&D. We compare estimates of capital services based on an endogenous (ex post) rate of return with ones based on a hybrid method which allows for ex ante risk: firms' expectations may not be satisfied. Contrary to expectation, we find that capital intensity (capital services per hour worked) rose during the Great Recession even though labour productivity fell. And the wealth–income ratio is now substantially lower than it was in the early 1980s unless dwellings are included in the total.

Suggested Citation

  • Oulton, Nicholas & Wallis, Gavin, 2016. "Capital stocks and capital services: integrated and consistent estimates for the United Kingdom, 1950–2013," LSE Research Online Documents on Economics 65300, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:65300
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    File URL: http://eprints.lse.ac.uk/65300/
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    References listed on IDEAS

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    1. Robert Inklaar, 2010. "The Sensitivity Of Capital Services Measurement: Measure All Assets And The Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 389-412, June.
    2. Mariela Dal Borgo & Peter Goodridge & Jonathan Haskel & Annarosa Pesole, 2013. "Productivity and Growth in UK Industries: An Intangible Investment Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(6), pages 806-834, December.
    3. Nicholas Oulton, 2007. "Ex Post Versus Ex Ante Measures Of The User Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 295-317, June.
    4. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    5. Di Corato, Luca & Moretto, Michele & Vergalli, Sergio, 2014. "Long-run investment under uncertain demand," Economic Modelling, Elsevier, vol. 41(C), pages 80-89.
    6. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 90(1), pages 156-162.
    7. Carol Corrado & Charles Hulten & Daniel Sichel, 2009. "Intangible Capital And U.S. Economic Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 661-685, September.
    8. Nicholas Oulton & Sylaja Srinivasan, 2003. "Capital stocks, capital services, and depreciation: an integrated framework," Bank of England working papers 192, Bank of England.
    9. Feil, Jan-Henning & Musshoff, Oliver, 2013. "Modelling investment and disinvestment decisions under competition, uncertainty and different market interventions," Economic Modelling, Elsevier, vol. 35(C), pages 443-452.
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    Cited by:

    1. repec:eee:ecmode:v:75:y:2018:i:c:p:246-255 is not listed on IDEAS
    2. Bill Martin & Centre for Business Research, 2018. "A Comment on Oulton, "The UK Productivity Puzzle: Does Arthur Lewis Hold the Key?"," Working Papers wp498, Centre for Business Research, University of Cambridge.
    3. repec:nsr:escoed:escoe-dp-2018-06 is not listed on IDEAS

    More about this item

    Keywords

    capital services; capital stocks; rate of return; depreciation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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