Depreciation, Deterioration and Obsolescence when there is Embodied or Disembodied Technical Change

Walter Erwin Diewert () and Frank C. Wykoff

UBC Departmental Archives from UBC Department of Economics

Abstract: The paper considers how to measure capital in a model where technical progress is either embodied in new units of capital or it is "disembodied" and simply causes the price of capital services to fall. The disembodied case is considered in sections 2-4. Sections 2 and 3 set out standard vintage capital aggregation models when there is no embodied technical progress. Section 4 discusses disembodied obsolescence in more detail. Section 5 introduces new (more efficient) models of the capital good so that technical progress is embodied in the new models. Section 6 shows how the parameters in the Jorgenson model of capital services could be estimated by statistical agencies if their investment surveys covered sales and retirements of used assets as well as purchases of new assets. Section 7 concludes.

Keywords: Aggregation of Capital; embodiment of technical progress; depreciation; deterioration; obsolescence; index number theory (search for similar items in EconPapers)
JEL-codes: C43 C81 D24 D92 E22 M4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-bec and nep-mac
Date: 2006-11-23, Revised 2007-07-13
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Persistent link: http://EconPapers.repec.org/RePEc:ubc:bricol:diewert-06-11-23-08-38-56

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