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A user cost approach to capital measurement in aggregate production functions

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  • Knetsch, Thomas A.

Abstract

A method is proposed to measure capital services in production. This means that productive assets are weighted according to their user costs. The user costs of the individual asset classes are estimated based on data from the national accounts and other sources. The results show that, in the observation period between 1991 and 2010, enterprises' capital services expand faster than the offcially published capital stock. For the economy as a whole, this applies only to phases of cyclical expansion. As the capital stock is aggregated using asset prices, the differences can be explained by the dfferent weighting methods in conjunction with the varying speeds at which the individual asset types have accumulated over time. In growth accounting, different estimates of total factor productivity emerge. The methodological difference, however, does not significantly affect the estimates of parametric production function specifications.

Suggested Citation

  • Knetsch, Thomas A., 2012. "A user cost approach to capital measurement in aggregate production functions," Discussion Papers 01/2012e, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:012012e
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    More about this item

    Keywords

    Capital stock; aggregation; production function; TFP; Kapitalstock; Aggregation; Produktionsfunktion; TFP;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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