A METHOD FOR IMPROVED CAPITAL MEASUREMENT BY COMBINING ACCOUNTS AND FIRM INVESTMENT DATA

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...

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Bibliographic Details
Published in:The Review of income and wealth 2007-09, Vol.53 (3), p.397-421
Main Authors: Raknerud, Arvid, Rønningen, Dag, Skjerpen, Terje
Format: Article
Language:English
Subjects:
Capital
Capital measurement
Economic growth
Economic research
Economic theory
Enterprises
Estimating techniques
Inventories
Investment
Investments
Norway
Stocks
Studies
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Summary: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 not included in the data set. 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.
ISSN:0034-6586
1475-4991
DOI:10.1111/j.1475-4991.2007.00241.x