Depreciation of Business R&D Capital

Wendy C.Y. Li and Bronwyn Hall

No 22473, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a forward‐looking profit model to estimate the depreciation rates of business R&D capital. By using data from BEA and NSF between 1987 and 2007, and the newly developed model, we estimate both constant and time‐varying industry‐specific R&D depreciation rates. The results comprise a set of R&D depreciation rates for major U.S. high-tech industries. They align with the main conclusions from recent studies that the rates are in general higher than the traditionally assumed 15 percent and vary across industries. The relative ranking of the constant R&D depreciation rates among industries is consistent with industry observations and the industry‐specific time‐varying rates are informative about the dynamics of technological change and the levels of competition across industries. Lastly, we also present a cross‐country comparison of the R&D depreciation rates between the U.S. and Japan, and find that the results reflect the relative technological competitiveness in key industries.

JEL-codes: D20 G12 L20 O30 O32 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-com, nep-ino, nep-knm and nep-tid
Note: EFG IO PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Forthcoming in the Review of Income and Wealth

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Related works:
Journal Article: Depreciation of Business R&D Capital (2020)
Working Paper: Depreciation of Business R&D Capital (2016)
Working Paper: Depreciation of Business R&D Capital (2016)
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