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Age-Efficiency and Replacement Requirements for Measures of Capital Services

Matthew A. Andersen ()
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Matthew A. Andersen: Dept. of Agricultural and Applied Economics, The University of Wyoming, USA,

Review of Economics & Finance, 2018, vol. 13, 55-61

Abstract: Measures of capital input depend on assumptions that are typically made without clear direction from economic theory, such as the best method for incorporating the physical deterioration of assets into measures of capital stocks and capital services. Compared with alternative ageefficiency profiles that might be assumed, a geometric profile has the advantages of general applicability, internal consistency, ease of use in data construction, and most importantly its robust approximation to the physical deterioration of assets given the types and sources of data that are typically available to researchers for constructing such measures.

Keywords: Capital services; Age-efficiency profiles; Deterioration; Depreciation; Geometric profile (search for similar items in EconPapers)
JEL-codes: D24 E22 (search for similar items in EconPapers)
Date: 2018
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