Estimation of a variable rate of depreciation: a dummy variable approach

Prucha, Ingmar R.

doi:10.1016/s0954-349x(97)00007-6

Cited by 9 publications

(5 citation statements)

References 9 publications

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“…t and Y t move quite close to each other though capital stock is somewhat less than the output for most part of the sample period visibly except 2003 to 2007 sub sample period. Pula [10] finds that the average capital output ratio for US during 1980-1990 period based on the data in Summers and Heston [6] is approximately 0.9 which is quite close to 0.94 based on the our estimated capital stocks for the same period.…”

supporting

confidence: 66%

“…Once the average rate of capital depreciation is estimated, the values of capital stocks are calculated as a weighted sum of current and lagged investment values. On the contrary, Prucha [6] uses dummy variables to estimate this rate of depreciation. The subsequent series of capital stocks then are calculated using the same method used in Hulten, C.R.…”

Section: Existing Literaturementioning

confidence: 99%

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Capital Estimation: Theory and US-Japan Comparative Study

Vu¹

2013

J. Basic Appl. Sci.

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Capital stock estimation is a thorny task to deal with. To circumvent the problem, we derive a function which does not contain capital stock, yet whose regression indirectly estimates the production function. Consequently, the estimated production function can generate the capital stocks and depreciation rates. The approach applied to US data resulted in estimates of both production function and capital stock very close to those differently estimated in existing literature. Japan data are then applied as a comparative study.

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supporting

confidence: 66%

Section: Existing Literaturementioning

confidence: 99%

Capital Estimation: Theory and US-Japan Comparative Study

Vu¹

2013

J. Basic Appl. Sci.

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“…It is more accurate to estimate the depreciation rate by using the depreciation amount, but this approach does not consider the differences, utilization rate, and investment willingness of various types of capital goods. Due to the random deviation in the course of parameter estimation, the final result of the econometric model method has serious errors, and some assumptions of the production function are not sufficient and need to be discussed (Prucha, 1997). The relative efficiency model is relatively objective and accurate and conforms to the capital goods homogeneity principle of standard investment theory.…”

Section: Environmental Governance Efficiencymentioning

confidence: 99%

Research on China's Environmental Governance Mode: Quality Driven or Quantity Driven?

Chen²,

Zhao³

et al. 2022

Front. Environ. Sci.

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High-quality environmental governance (EG) is closely related to its governance mode. Nevertheless, few studies have examined the EG modes from the dual perspectives of quality and quantity. This article utilizes panel data of 30 Chinese provinces from 2003 to 2020 to research the influence of environmental governance efficiency (EGE) and investment (EGI) on EG through a fixed-effect mode. The outcomes show that China’s EG is driven mainly by quantitative EGI. EGE and EGI show significant geographic regions, economic development levels, resource endowments, and stage heterogeneity to EG. In light of these conclusions, this article argues that the future needs to reasonably allocate EGI based on consideration of the heterogeneity of geographical regions, economic development levels, and resource endowments to optimize EGI structure and increase EGE in each province to achieve high-quality EG.

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“…Thus, if an empirically oriented economist wishes to acquire data on certain capital stock series for his research, the chances are that he will be able to get them or to construct them quickly and without much investment in time and resources. On the contrary, if he wishes to compute capital stock series on the basis of another methodology, say, like the one suggested by Prucha (1997), the task would require a significant diversion from the primary purpose of his investigation, and this only if he has the knowledge and the resources to accomplish it. What all this implies is that there is a built-in inertia in empirical research that favors the dominance of the theorem.…”

Section: Availability Of Datamentioning

confidence: 99%

The Puzzle of the Replacement Ratio in the Context of Renewal Theory

Bitros

2010

SSRN Journal

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The models Feldstein and Rothschild (1974) and Jorgenson (1974) adopted to highlight the nature of the replacement ratio were identical. Yet, even though the theorems they derived from them were complementary and reinforced each other, the authors reached diametrically opposite conclusions. Digging deeper into the controversy that erupted, it emerges that the staying power of the theorem, according to which replacement is a constant proportion of the outstanding capital stock, may be attributed to the following reasons. The discernible shift from realism to instrumentalism in the methodology of economics; Its operational advantages; The data that accumulated, thus facilitating research without having to compute capital stock series from scratch; The inertia of the status quo, which is sustained by the absence of a process to decide when a theorem is in conflict with experience and should be set aside, and lastly the lack of a model leading to a more useful theorem than the one under consideration. In this light it is concluded that the time has come for research efforts to be directed towards constructing and testing models in which the useful life of capital is determined endogenously in the presence of embodied technological change. JEL Classification: E22

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Estimation of a variable rate of depreciation: a dummy variable approach

Cited by 9 publications

References 9 publications

Capital Estimation: Theory and US-Japan Comparative Study

Capital Estimation: Theory and US-Japan Comparative Study

Research on China's Environmental Governance Mode: Quality Driven or Quantity Driven?

The Puzzle of the Replacement Ratio in the Context of Renewal Theory

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