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

Authors


  • Note: This paper has benefited from numerous comments and suggestions. In particular, we would like to thank Morten Andersen, Erik Biørn, Aadne Cappelen, Rolf Golombek, Eirik Knutsen, and Jarle Møen. We are particularly indebted to two anonymous referees for many constructive comments. This research has been financially supported by the Norwegian Research Council (Grant no. 154710/510).

*Arvid Raknerud, Statistics Norway, Research Department, P.O. Box 8131 Dep, N-0033, Norway (arvid.raknerud@ssb.no).

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 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.

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