User Costs versus Waiting Services and Depreciation in a Model of Production
The paper develops an extension of a one period model of production involving beginning and end of the period capital stocks along with output and input flows that is due to Hicks and Edwards and Bell. This generalized Austrian model of production takes into account that end of the period capital stocks result from: (i) purchases of new investment goods; (ii) internal construction of firm capital stock components and (iii) holdings of (depreciated) capital goods that were held by the firm at the beginning of the period. These different methods of creating end of period holdings of capital stocks generally have different resource requirements and hence the one period production possibilities set is more complex than the usual one. This general model of production is used to justify the decomposition of the Jorgensonian user cost of capital into separate waiting services and depreciation components.
|Date of creation:||27 Oct 2009|
|Date of revision:||27 Oct 2009|
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- W. Erwin Diewert & Catherine J. Morrison, 1985.
"Adjusting Output and Productivity Indexes for Changes in the Terms of Trade,"
NBER Working Papers
1564, National Bureau of Economic Research, Inc.
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- Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 163-98, July.
- Rymes, T K, 1983. "More on the Measurement of Total Factor Productivity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(3), pages 297-316, September.
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- W. Erwin Diewert & Ann Marie Smith, 1994. "Productivity Measurement for a Distribution Firm," NBER Working Papers 4812, National Bureau of Economic Research, Inc.
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