IDEAS home Printed from https://ideas.repec.org/p/fip/fedgif/485.html
   My bibliography  Save this paper

Technological progress and endogenous capital depreciation: evidence from the U.S. and Japan

Author

Listed:
  • Robert Dekle

Abstract

Japanese government planners use the average age of the manufacturing capital stock as one measure of their country's international "competitiveness." Compared to the U.S., the data show that Japanese depreciation rates are higher and that capital stocks are younger. ; In much of economic analysis, higher rates of depreciation are assumed to result in poorer economic performance. A high depreciation rate lowers the net capital stock, and decreases the level of output. ; In this paper, we argue that Japan's high depreciation rate is caused by that country's high rate of technological progress. Hiqh depreciation rates may be a symptom of a rapidly growing economy. ; Our results have implications for the international comparison of investment rates. Many economists have compared U.S. and Japanese investment rates net of the depreciation of capital. Presumably, economists are interested in investment rates because of the belief that high rates are positively correlated with a high level of economic performance. ; If technological progress causes depreciation rates to be high, however, net investment rates may not be informative about a nation's welfare. Two countries with the same net investment rate can have different rates of per capita output growth if their rates of technological progress are different. We show that the investment rate gross of depreciation may be a better indicator of welfare.

Suggested Citation

  • Robert Dekle, 1994. "Technological progress and endogenous capital depreciation: evidence from the U.S. and Japan," International Finance Discussion Papers 485, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgif:485
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/ifdp/1994/485/default.htm
    Download Restriction: no

    File URL: http://www.federalreserve.gov/pubs/ifdp/1994/485/ifdp485.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ludmila Fadejeva & Aleksejs Melihovs, 2010. "Measuring Total Factor Productivity and Variable Factor Utilization," Eastern European Economics, Taylor & Francis Journals, vol. 48(5), pages 63-101, September.

    More about this item

    Keywords

    Saving and investment ; Capital ; Japan;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgif:485. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Franz Osorio). General contact details of provider: http://edirc.repec.org/data/frbgvus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.