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A Method for Improved Capital Measurement by Combining Accounts and Firm Investment Data. A revised version

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Abstract

We propose a new method for estimating capital stocks at the firm level by combining business accounts information and investment data. The method also produces capital estimates at the sector or industry level by summing individual firms' capital stocks and appropriately inflating this sum to account for firms with missing data. Our approach has two major advantages compared with the much used Perpetual Inventory Method (PIM). First, long investment series are not necessary. Second, sector capital estimates are automatically adjusted for changes in the capital stock because of entry and exit of firms. While capital growth rates in Norwegian manufacturing were only 1 percent on average during 1993--2004 according to national accounts figures, our method yields much higher growth rates of 5.5 percent on average.

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  • Arvid Raknerud & Dag Rønningen & Terje Skjerpen, 2007. "A Method for Improved Capital Measurement by Combining Accounts and Firm Investment Data. A revised version," Discussion Papers 365, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:365
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    1. Jorgenson, Dale W, 1996. "Empirical Studies of Depreciation," Economic Inquiry, Western Economic Association International, vol. 34(1), pages 24-42, January.
    2. Klette, Tor Jakob & Griliches, Zvi, 1996. "The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Endogenous," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(4), pages 343-361, July-Aug..
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    4. Ellen R. McGrattan & James A. Schmitz, 1999. "Maintenance and repair: too big to ignore," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 23(Fall), pages 2-13.
    5. Hulten, Charles R. & Wykoff, Frank C., 1981. "The estimation of economic depreciation using vintage asset prices : An application of the Box-Cox power transformation," Journal of Econometrics, Elsevier, vol. 15(3), pages 367-396, April.
    6. Hicks, John R, 1974. "Capital Controversies: Ancient and Modern," American Economic Review, American Economic Association, vol. 64(2), pages 307-316, May.
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    Cited by:

    1. Elena Cefis & Cristina Bettinelli & Alex Coad & Orietta Marsili, 2022. "Understanding firm exit: a systematic literature review," Small Business Economics, Springer, vol. 59(2), pages 423-446, August.
    2. Møen, Jarle, 2018. "Corporate returns to subsidized R&D projects: Direct grants vs tax credit financing," Discussion Papers 2018/9, Norwegian School of Economics, Department of Business and Management Science.
    3. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2005. "Lumpy Investments, Factor Adjustments and Productivity," Discussion Papers 441, Statistics Norway, Research Department.
    4. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2011. "The Importance Of Skill Measurement For Growth Accounting," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(2), pages 293-305, June.
    5. Rolf Golombek & Arvid Raknerud, 2012. "Exit dynamics of start-up firms. Does profit matter?," Discussion Papers 706, Statistics Norway, Research Department.
    6. Dale-Olsen, Harald & Finseraas, Henning, 2020. "Linguistic diversity and workplace productivity," Labour Economics, Elsevier, vol. 64(C).
    7. Chen, Xi & Plotnikova, Tatiana, 2014. "Retrieving initial capital distributions from panel data," MPRA Paper 61154, University Library of Munich, Germany.
    8. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2009. "Lumpy investments, factor adjustments, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 104-127, January.
    9. Dale-Olsen, Harald & Finseraas, Henning, 2019. "Linguistic Diversity and Workplace Productivity," IZA Discussion Papers 12621, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Capital measurement; Accounts data; Firm panel data; Net capital stocks; Depreciation;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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