Empirical Research on Depreciation of Business R&D Capital

Akiyuki Tonogi, Michiyo Kitaoka and Wendy C. Y. Li

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: The Japanese Government is planning to change the estimation methods of the Japanese System of National Accounts (JSNA) in 2016, from the 1993 System of National Accounts (SNA) to the 2008 SNA. Following this change, research and development (R&D) expenditures will be counted as investments and will be capitalized in the GDP accounts. To capitalize R&D expenditures, we need to estimate R&D capital stock; hence, the methods of estimating R&D depreciation rates are critical. This paper investigates the R&D depreciation in the JSNA based on the methodology developed by Li (2012a). By adopting Li’s model and using data on industry outputs and R&D investments from Japan, we estimate the R&D depreciation rates of 20 Japanese industries. The estimates we obtain are consistent with the results of prior studies and the recent survey results reported by Miyagawa et al. (2014).

Pages: 17 pages
Date: 2015-03
New Economics Papers: this item is included in nep-acc and nep-ino
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