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New Evidence on the Service Lives of Capital Goods of Italian Firms

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  • Elena Mattevi
  • Lucia Modugno

Abstract

We document Italian firms’ propensity to replace capital goods in the period 2014-2018, the main reasons for disposals from the production process, and features of the service lives of different categories of capital goods, as reported by producers and users interviewed in the Bank of Italy Survey of industrial and service firms. We find that during that period, which was marked by a recovery in aggregate investment activity following a long recession, a significant share of firms also dismissed some capital goods from their production processes. In over one-fifth of cases, goods were transferred due to substitution for a technological upgrade, while most disposals were due to technical obsolescence. Estimates of service lives indicate a more frequent turnover of computers and communication equipment compared to furniture and machinery and are longer in manufacturing than in services. We find indications of a decline in service lives in the decade leading up to 2019 for the surveyed items, which seems moderate in most sectors.

Suggested Citation

  • Elena Mattevi & Lucia Modugno, 2023. "New Evidence on the Service Lives of Capital Goods of Italian Firms," Politica economica, Società editrice il Mulino, issue 1, pages 121-146.
    • Handle: RePEc:mul:je8794:doi:10.1429/113647:y:2023:i:1:p:121-146
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