Capital Stock and Depreciation: Theory and an Empirical Application

F. J. Escribá-Pérez (), M. J. Murgui-García () and José Ruiz-Tamarit
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F. J. Escribá-Pérez: Department of Economic Analysis, Universitat de València (Spain)
M. J. Murgui-García: Department of Economic Analysis, Universitat de València (Spain)

No 2019004, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: There are many puzzles and unresolved problems in empirical economics that depend on the reliability of the productive capital series. Some macroeconomic topics and questions cannot be addressed correctly or answered with the available standard statistical measures of capital stock. We make an innovative contribution to the theory of capital together with an exercise that quantifies the depreciation rate and the capital stock for the U.S. economy. An intertemporal optimization model with adjustment and maintenance costs, gives us the algorithm and the corresponding economic estimation of capital deterioration and obsolescence. Our measures are based on profitability and the Tobin’s q ratio.

Keywords: Capacity Utilization; Capital; Depreciation; Maintenance; Obsolescence; Tobin’s q (search for similar items in EconPapers)
JEL-codes: C61 D21 E22 (search for similar items in EconPapers)
Date: 2019-01-03
New Economics Papers: this item is included in nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2019004

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