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Capital Stock Estimation in Hungary: A Brief Description of Methodolgy and Results

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  • Gábor Pula

    () (Magyar Nemzeti Bank)

Abstract

The 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.

Suggested Citation

  • Gábor Pula, 2003. "Capital Stock Estimation in Hungary: A Brief Description of Methodolgy and Results," MNB Working Papers 2003/7, Magyar Nemzeti Bank (Central Bank of Hungary).
  • Handle: RePEc:mnb:wpaper:2003/7
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    File URL: http://www.mnb.hu/letoltes/wp2003-7.pdf
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    Cited by:

    1. Peter BENCZUR, "undated". "Real Effects of Nominal Shocks: a 2-Sector Dynamic Model with Slow Capital Adjustment and Money-in-the-Utility," EcoMod2004 330600021, EcoMod.
    2. Biljana Petkovska, 2008. "Estimation of the investment function for the Republic of Macedonia," Working Papers 2008-04, National Bank of the Republic of Macedonia.
    3. Claudia Henríquez G., 2008. "Stock de Capital en Chile (1985-2005): Metodología y Resultados," Economic Statistics Series 63, Central Bank of Chile.
    4. Rasmus Kattai, 2010. "Estonia's potential growth revisited," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 10(2), pages 63-78, December.
    5. Benczur, Peter & Simon, Andras & Varpalotai, Viktor, 2006. "Social costs of consumer impatience in Hungary," Journal of Policy Modeling, Elsevier, vol. 28(8), pages 921-930, November.
    6. Ádám Reiff, 2010. "Firm-level adjustment costs and aggregate investment dynamics – Estimation on Hungarian data," MNB Working Papers 2010/2, Magyar Nemzeti Bank (Central Bank of Hungary).
    7. Bas van Leeuwen & Peter Földvári, 2013. "Capital Accumulation and Growth in Central Europe, 1920-2006," Eastern European Economics, Taylor & Francis Journals, vol. 51(5), pages 69-93, September.
    8. Sass, Magdolna, 2004. "FDI in Hungary - the first mover's advantage and disadvantage," EIB Papers 8/2004, European Investment Bank, Economics Department.
    9. Rasmus Kattai, 2005. "EMMA - A Quarterly Model of the Estonian Economy," Bank of Estonia Working Papers 2005-12, Bank of Estonia, revised 12 Dec 2005.
    10. Erol Taymaz & Ebru Voyvoda & Kamil Yilmaz, 2008. "Turkiye Imalat Sanayiinde Yapisal Dönüsüm ve Teknolojik Degisme Dinamikleri," ERC Working Papers 0804, ERC - Economic Research Center, Middle East Technical University, revised Jun 2008.
    11. Szilárd Benk & Zoltán M. Jakab & Gábor Vadas, 2005. "Potential Output Estimations for Hungary: A Survey of Different Approaches," MNB Occasional Papers 2005/43, Magyar Nemzeti Bank (Central Bank of Hungary).
    12. Rasmus Kattai, 2010. "Potential output and the output gap in Estonia - a macro model based evalutaion," Bank of Estonia Working Papers wp2010-03, Bank of Estonia, revised 11 Feb 2010.
    13. Ákos Dombi, 2013. "Economic Growth and Development in Central and Eastern Europe after the Transformation," Public Finance Quarterly, State Audit Office of Hungary, vol. 58(4), pages 452-468.
    14. Marcin Piatkowski, 2004. "Does ICT Investment Matter for Growth and Labor Productivity in Transition Economies?," Development and Comp Systems 0402008, EconWPA.

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    Keywords

    capital stock; Hungary;

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