IDEAS home Printed from https://ideas.repec.org/p/qmw/qmwecw/503.html
   My bibliography  Save this paper

An Economical Approach to Estimate a Benchmark Capital Stock. An Optimal Consistency Method

Author

Listed:
  • Jose Miguel Albala-Bertrand

    (Queen Mary, University of London)

Abstract

There are alternative methods of estimating capital stock for a benchmark year. However, these methods are costly and time-consuming, requiring the gathering of much basic information as well as the use of some convenient assumptions and guesses. In addition, a way is needed of checking whether the estimated benchmark is at the correct level. This paper proposes an optimal consistency method (OCM), which enables a capital stock to be estimated for a benchmark year, and which can also be used in checking the consistency of alternative estimates. This method, in contrast to most current approaches, pays due regards both to potential output and to the productivity of capital. It works well, and it requires only small amounts of data, which are readily available. This makes it virtually costless in both time and funding.

Suggested Citation

  • Jose Miguel Albala-Bertrand, 2003. "An Economical Approach to Estimate a Benchmark Capital Stock. An Optimal Consistency Method," Working Papers 503, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:503
    as

    Download full text from publisher

    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2003/items/wp503.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hofman, André A., 2000. "The economic development of Latin America in the twentieth century," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1650 edited by Eclac.
    2. Robert M. Solow, 1994. "Perspectives on Growth Theory," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 45-54, Winter.
    3. Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-980, September.
    4. Raymond W. Goldsmith, 1951. "A Perpetual Inventory of National Wealth," NBER Chapters, in: Studies in Income and Wealth, Volume 14, pages 5-73, National Bureau of Economic Research, Inc.
    5. Hofman, Andre A, 2000. "Standardised Capital Stock Estimates in Latin America: A 1950-94 Update," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(1), pages 45-86, January.
    6. A. P. Thirlwall, 1989. "Growth and Development," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-19837-5, March.
    7. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jose Miguel Albala-Bertrand, 2007. "Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method," Working Papers 610, Queen Mary University of London, School of Economics and Finance.
    2. Claudia Henríquez G., 2008. "Stock de Capital en Chile (1985-2005): Metodología y Resultados," Economic Statistics Series 63, Central Bank of Chile.
    3. J.M. Albala-Bertrand, 2018. "Structural Change behind GDP Growth Rates via Key Indicators: Chile 1996-2015," International Business Research, Canadian Center of Science and Education, vol. 11(8), pages 38-47, August.
    4. Emmanuel C. Mamatzakis, 2007. "An Analysis of the Impact of Public Infrastructure on Productivity Performance of Mexican Industry," CESifo Working Paper Series 2099, CESifo.
    5. J. M. Albala‐Bertrand & E. C. Mamatzakis, 2007. "The Impact Of Disaggregated Infrastructure Capital On The Productivity Growth Of The Chilean Economy," Manchester School, University of Manchester, vol. 75(2), pages 258-273, March.
    6. Fachru Nofrian, 2019. "Industrialization and Profit-Rate Analysis in Indonesia," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(3), pages 438-456, September.
    7. Jose Miguel Albala-Bertrand, 2004. "Can the Composition of Capital Constrain Potential Output? A Gap Approach," Working Papers 510, Queen Mary University of London, School of Economics and Finance.
    8. Jose Miguel Albala-Bertrand, 2007. "Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method," Working Papers 610, Queen Mary University of London, School of Economics and Finance.
    9. Jose Miguel Albala-Bertrand, 2004. "Can the Composition of Capital Constrain Potential Output? A Gap Approach," Working Papers 510, Queen Mary University of London, School of Economics and Finance.
    10. Mamatzakis, E. & Tsionas, M., 2018. "Revisiting the returns of public infrastructure in Mexico: A limited information local likelihood estimation," Economic Modelling, Elsevier, vol. 75(C), pages 132-141.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jose Miguel Albala-Bertrand, 2007. "Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method," Working Papers 610, Queen Mary University of London, School of Economics and Finance.
    2. Jose Miguel Albala-Bertrand, 2001. "A Benchmark Estimate for the Capital Stock. An Optimal Consistency Method," Working Papers 434, Queen Mary University of London, School of Economics and Finance.
    3. Jose Miguel Albala-Bertrand, 2001. "A Benchmark Estimate for the Capital Stock. An Optimal Consistency Method," Working Papers 434, Queen Mary University of London, School of Economics and Finance.
    4. Jose Miguel Albala-Bertrand, 2003. "An Economical Approach to Estimate a Benchmark Capital Stock. An Optimal Consistency Method," Working Papers 503, Queen Mary University of London, School of Economics and Finance.
    5. Jose Miguel Albala-Bertrand, 2007. "Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method," Working Papers 610, Queen Mary University of London, School of Economics and Finance.
    6. Hofman, André A., 2000. "Economic growth and performance in Latin America," Series Históricas 7535, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. J.M. Albala-Bertrand, 2018. "Structural Change behind GDP Growth Rates via Key Indicators: Chile 1996-2015," International Business Research, Canadian Center of Science and Education, vol. 11(8), pages 38-47, August.
    8. Yang, Guo-liang & Fukuyama, Hirofumi, 2018. "Measuring the Chinese regional production potential using a generalized capacity utilization indicator," Omega, Elsevier, vol. 76(C), pages 112-127.
    9. -, 2003. "A decade of light and shadow: Latin America and the Caribbean in the 1990s," Libros de la CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 2355 edited by Eclac, May.
    10. Mary J. Keeney, 2007. "Measuring Irish Capital," The Economic and Social Review, Economic and Social Studies, vol. 38(1), pages 25-62.
    11. Hideyuki Mizobuchi, 2015. "Multiple Directions for Measuring Biased Technical Change," CEPA Working Papers Series WP092015, School of Economics, University of Queensland, Australia.
    12. Rosés, Joan R., 2008. "Proximate causes of economic growth in Spain, 1850-2000," IFCS - Working Papers in Economic History.WH wp08-12, Universidad Carlos III de Madrid. Instituto Figuerola.
    13. Meschi, Elena & Taymaz, Erol & Vivarelli, Marco, 2011. "Trade, technology and skills: Evidence from Turkish microdata," Labour Economics, Elsevier, vol. 18(S1), pages 60-70.
    14. Georges Daw, 2022. "Determinants of Wealth Disparities in the EU: A Multi-scale Development Accounting Investigation," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(2), pages 211-254, June.
    15. Garcia, Angel & Jaumandreu, Jordi & Rodriguez, Cesar, 2004. "Innovation and jobs: evidence from manufacturing firms," MPRA Paper 1204, University Library of Munich, Germany.
    16. Gittleman, Maury & ten Raa, Thijs & Wolff, Edward N., 2006. "The vintage effect in TFP-growth: An analysis of the age structure of capital," Structural Change and Economic Dynamics, Elsevier, vol. 17(3), pages 306-328, September.
    17. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    18. Keller, Wolfgang, 2001. "The geography and channels of diffusion at the world's technology frontier," HWWA Discussion Papers 123, Hamburg Institute of International Economics (HWWA).
    19. Greenwood, Jeremy & Krusell, Per, 2007. "Growth accounting with investment-specific technological progress: A discussion of two approaches," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1300-1310, May.
    20. Gary Madden & Harry Bloch & Grant Coble-Neal, 2002. "Labour and capital saving technical change in telecommunications," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1821-1828.

    More about this item

    Keywords

    Benchmark capital; Perpetual Inventory Method (PIM); Potential output; Capital productivity; Optimal Consistency Method (OCM);
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qmw:qmwecw:503. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Nicholas Owen (email available below). General contact details of provider: https://edirc.repec.org/data/deqmwuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.