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Capital Stock and Depreciation: Theory and an Empirical Application

Author

Listed:
  • F. J. Escribá-Pérez

    (Department of Economic Analysis, Universitat de València (Spain))

  • M. J. Murgui-García

    (Department of Economic Analysis, Universitat de València (Spain))

  • J. R. Ruiz-Tamarit

    (Department of Economic Analysis, Universitat de València (Spain))

Abstract

There are many puzzles and unresolved problems in empirical economics that depend on the reliability of the productive capital series. Some macroeconomic topics and questions cannot be addressed correctly or answered with the available standard statistical measures of capital stock. We make an innovative contribution to the theory of capital together with an exercise that quantifies the depreciation rate and the capital stock for the U.S. economy. An intertemporal optimization model with adjustment and maintenance costs, gives us the algorithm and the corresponding economic estimation of capital deterioration and obsolescence. Our measures are based on profitability and the Tobin’s q ratio.

Suggested Citation

  • F. J. Escribá-Pérez & M. J. Murgui-García & J. R. Ruiz-Tamarit, 2019. "Capital Stock and Depreciation: Theory and an Empirical Application," LIDAM Discussion Papers IRES 2019004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2019004
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    References listed on IDEAS

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    Cited by:

    1. Francisco-Javier Escribá-Pérez & María-José Murgui-García & José-Ramón Ruiz-Tamarit, 2022. "The devil is in the details: Capital stock estimation and aggregate productivity growth—An application to the Spanish economy," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(1), pages 31-50, January.
    2. Mahbuba Aktar & Mohammad Zoynul Abedin & Anupam Das Gupta, 2021. "The Impact of Monetary Policy Shocks on Corporate Dynamic Investment Activity With Financial Heterogeneity," SAGE Open, , vol. 11(1), pages 21582440209, February.

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    More about this item

    Keywords

    Capacity Utilization; Capital; Depreciation; Maintenance; Obsolescence; Tobin’s q;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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