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Micro Data On Capital Inputs: Attempts to Reconcile Stock and Flow Information

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Abstract

We evaluate consequences of some important assumptions ofthe perpetual inventory method of capital stock calculation under geometric depreciation. The data are plant-level panel data from the Norwegian manufacturing statistics, containing independent measures of capital stocks and gross investment flows for two capital types and three industries. First, we look at consequences of choosing different depreciation rates a priori, when we use as benchmark for the level of the capital stocks deflated fire insurance values in a specific year. The choice of depreciation rate is of substantial importance, some values resulting in decreasing, other in increasing capital stocks over time. Second, we attempt to estimate depreciation rates by combining time series on gross investment and fire insurance values for the same period. In our regression models, both systematic and random measurement errors in the fire insurance values and various forms of heterogeneity in the coefficient structure are represented. We conclude that the estimated depreciation rates vary significantly with the specification of the measurement error process and that heterogeneity in this process across plants is important.

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  • Erik Biørn & Kjersti-Gro Lindquist & Terje Skjerpen, 2000. "Micro Data On Capital Inputs: Attempts to Reconcile Stock and Flow Information," Discussion Papers 268, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:268
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp268.pdf
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    1. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    2. Wadhwani, Sushil & Wall, Martin, 1986. "The UK Capital Stock--New Estimates of Premature Scrapping," Oxford Review of Economic Policy, Oxford University Press, vol. 2(3), pages 44-55, Autumn.
    3. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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    Cited by:

    1. Erik Biørn & Terje Skjerpen & Knut Reidar Wangen, 2003. "Parametric Aggregation of Random Coefficient Cobb-Douglas Production Functions: Evidence from Manufacturing Industries," Discussion Papers 342, Statistics Norway, Research Department.
    2. Biorn, Erik & Skjerpen, Terje, 2004. "Aggregation biases in production functions: a panel data analysis of Translog models," Research in Economics, Elsevier, vol. 58(1), pages 31-57, March.
    3. Biørn, Erik & Skjerpen, Terje & Wangen, Knut Reidar, 2004. "Can Random Coefficient Cobb-Douglas Production Functions Be Aggregated to Similar Macro Functions?," Memorandum 22/2004, Oslo University, Department of Economics.
    4. Erik Biørn & Kjersti-Gro Lindquist & Terje Skjerpen, 2002. "Heterogeneity in Returns to Scale: A Random Coefficient Analysis with Unbalanced Panel Data," Journal of Productivity Analysis, Springer, vol. 18(1), pages 39-57, July.
    5. Erik Biørn & Terje Skjerpen, 2002. "Aggregation and Aggregation Biases in Production Functions: A Panel Data Analysis of Translog Models," Discussion Papers 317, Statistics Norway, Research Department.

    More about this item

    Keywords

    Depreciation. Capital stock calculation. Panel data. Perpetual inventory method;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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