Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-27T06:59:10.392Z Has data issue: false hasContentIssue false
  • English
  • Français

Economic Measurement of Capital and Profitability

Published online by Cambridge University Press:  17 August 2016

Francisco Javier Escribá-Pérez  and
José Ramón Ruiz-Tamarit
Francisco Javier Escribá-Pérez
Affiliation:
Universitat de València
José Ramón Ruiz-Tamarit
Affiliation:
Universitat de València & Université Catholique de Louvain
Get access

Summary

In this paper, we intend to offer a critical review of the different concepts of capital and the different methods which are used to measure it. At the same time, we propose an endogenous approach which tries to measure the capital stock in terms of value, explicitly referring to depreciation as an economic variable decided by the firm. Applying this procedure to the Spanish macroeconomic data, we observe a big capital destruction since the mid-seventies which is not mentioned in official statistics.

Résumé

Résumé

Dans cet article nous entendons passer en revue les différents concepts de capital et les différentes méthodes utilisées pour le mesurer. Nous proposons une approche endogène pour essayer de le mesurer en terme de valeur en considérant, de manière explicite, la dépréciation comme une variable choisie par les firmes. En appliquant cette procédure aux données macroéconomiques espagnoles, on observe une importante destruction du capital, depuis le milieu des années septante, qui n’est pas mentionnée dans les statistiques.

Keywords

E22.E22.
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 61 , Issue 4 , 1995 , pp. 433 - 459
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1995 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

(*)

This text presents research results of the Belgian Programme on Interuniversity Poles of Attraction initiated by the Belgian State, Prime Minister’s Office, Science Policy Programming; as well as of the Human Capital and Mobility Programme: “The economic analysis of institutional and structural change as an integrated dynamic process. A computable economics approach”, European Commission, contract ERBCHRXCT930231. Financial support from the Dirección General de Investigación Científica y Técnica (DGICYT), Spanish Ministry of Education and Science, is gratefully acknowledged. We also thanks the comments of two anonymous referees.

References

Baily, N.M. [1981a], The Productivity Growth Slowdown and Capital Accumulation, AEA Papers and Proceedings, 71(2), pp. 326–331.Google Scholar
Baily, N.M. [1981b], Productivity and the Services of Capital and Labor, Brookings Papers on Economic Activity, 1(1), pp. 1–65.Google Scholar
Bitros, G.C. and Kelejian, H.H. [1974], On the Variability of the Replacement Investment Capital Stock Ratio: Some Evidence from Capital Scrappage, The Review of Economics and Statistics, 56, August, pp. 270–278.Google Scholar
Bitros, G.C. and Kelejian, H.H. [1977], A note on the Variability of the Replacement Investment Capital Stock Ratio: A Reply, The Review of Economics and Statistics, 59, May, pp. 510–513.Google Scholar
Bliss, C.J. [1968], On Putty-Clay, Review of Economic Studies, 35(2), n° 102, pp. 105–132.Google Scholar
Bond, S. and Devereux, M. [1988], Testing the Sensitivity of Q Investment Equations to Measurement of the Capital Stock, Working Paper W88/5, Institute for Fiscal Studies, London.Google Scholar
Bond, S. and Devereux, M. [1990], Economic Analysis and Company Accounts, Investigaciones Económicas (segunda época), 14(1), pp. 47–62.Google Scholar
Bosshardt, M.O. et Mairesse, J. [1980], Le Comportement de Déclassement des Entreprises: quelques Estimations, Annales de l’INSEE, n° 38–39, pp. 207–235.Google Scholar
Chan-Lee, J. et Torres, R. [1987], q de Tobin et Taux d’Accumulation en France, Annales d’Economie et de Statistique, n° 5, pp. 37–48.Google Scholar
Cowing, T. G. and Smith, V.K. [1977], A note on the Variability of the Replacement Investment Capital Stock Ratio, The Review of Economics and Statistics, 59, May, pp. 238–243.Google Scholar
Driver, C. [1986], The Scrapping Behaviour of Concentrated and Non-concentrated Industries in the UK, Applied Economics, 18(3), pp. 249–263.Google Scholar
Eisner, R. [1972], Components of Capital Expenditures: Replacement and Modernization versus Expansion, The Review of Economics and Statistics, 54, August, pp. 297–305.Google Scholar
Escriba, F.J. and Ruiz, J.R. [1991], Inversion, Capital y Beneficios en el Sector Endógeno de la Economía Española 1964–1990, Quadern de Treball n° 213, Facultat de Ciències Economiques i Empresarials, Universitat de Valencia, Valencia, España.Google Scholar
Escriba, F.J. and Ruiz, J.R. [1993], Empleo, Cambio Técnico y Estructura de la Inversión, Revista de Economía Aplicada, 1(2), pp. 67–98.Google Scholar
Escriba, F.J. and Ruiz, J.R. [1994], Endogenous Depreciation in a Putty-Putty Production Model, Discussion Paper DP-IRES 9423, Institut de Recherches Economiques et Sociales, IRES, Université Catholique de Louvain.Google Scholar
Espitia, M. [1987], Rentabilidad y Coste del Capital de la Empresa Española No Financiera 1962–1984, Situación, 1(4), Banco de Bilbao, pp. 62–83.Google Scholar
Feldstein, M.S. and Foot, D.K. [1971], The other Half of Gross Investment: Replacement and Modernization Expenditures, The Review of Economics and Statistics, 53, February, pp. 49–58.Google Scholar
Feldstein, M.S. and Rothschild, M. [1974], Towards an Economic Theory of Replacement Investment, Econometrica, 42(3), pp. 393–423.Google Scholar
Hulten, C.R. and Wykoff, F.C. [1980], Economic Depreciation and the Taxation of Structures in United States Manufacturing Industries: An Empirical Analysis, in Usher, D. [ed.], The Measurement of Capital, Chicago and London, The University of Chicago Press, pp. 83–119.Google Scholar
Hulten, C.R. and Wykoff, F.C. [1981], The Estimation of Economic Depreciation using Vintage Asset Prices, Journal of Econometrics, 15(3), pp. 367–396.Google Scholar
Hulten, C.R., Robertson, J.W. and Wykoff, F.C. [1989], Energy, Obsolescence, and the Productivity Slowdown, in Jorgenson, D.W. and Landau, R. (eds.), Technology and Capital Formation, Massachusets, The MIT Press, pp. 225–258.Google Scholar
Johansen, L. [1959], Substitution versus Fixed Production Coefficients in the Theory of Economic Growth: A Synthesis, Econometrica, 27(2), pp. 157–176.Google Scholar
Jorgenson, D.W. [1989], Capital as a Factor of Production, in Jorgenson, D.W. and Landau, R. [eds.], Technology and Capital Formation, Massachusets, The MIT Press, pp. 1–35.Google Scholar
Lloukas, S.K. [1980], Factors Affecting Capital Retirement: Evidence from Capacity Decommissioning Plans in a Publicly Owned Corporation, The Journal of Industrial Economics, 28(3), pp. 241–254.Google Scholar
Lloukas, S.K. [1982], The Cyclical Behaviour of Capital Retirement: Some new Evidence, Applied Economics, 14(1), pp. 73–79.Google Scholar
Mairesse, J. et Pescheux, J.M. [1980], Fonction de Production et Mesure du Capital: la Robustesse des Estimations, Annales de l’INSEE, n° 38–39, pp. 63–74.Google Scholar
Malcomson, J.M. [1975], Replacement and the Rental Value of Capital Equipment subject to Obsolescence, Journal of Economic Theory, 10(1), pp. 24–41.Google Scholar
Malcomson, J.M. and Prior, M.J. [1979], The Estimation of a Vintage Model of Production for UK Manufacturing, Review of Economic Studies, 46(4), pp. 719–736.Google Scholar
Malinvaud, E. [1987], Capital Productif, Incertitude et Profitabilité, Annales d’Economie et de Statistique, n° 5, pp. 1–36.Google Scholar
Martin, A. and Moreno, L. [1991], Medidas del Stock de Capital a partir de Datos Contables, Fundación Empresa Pública, Documento de Trabajo n° 9103, Madrid, España.Google Scholar
Mizon, G.E. [1974], The Estimation of Non-Linear Econometric Equations: An Application to the Especification and Estimation of an Aggregate Putty-Clay Relation for the United Kingdom, Review of Economic Studies, 41(3), pp. 353–369.Google Scholar
Nlckell, S. [1975], A Closer Look at Replacement Investment, Journal of Economic Theory, 10(1), PP. 54–88.Google Scholar
Phelps, E. [1963], Substitution, Fixed Proportions, Growth and Distribution, International Economic Review, 4(3), pp. 265–287.Google Scholar
Robinson, J. [1978], Contribution to Modern Economics, Oxford, Basil Blackwell.Google Scholar
Ruiz-Tamarit, J.R. [1992], Capital y Depreciación: Una Aproximación Endógena, Ph.D. Dissertation (Unpublished), Facultat de Ciències Economiques i Empresarials, Universitat de Valencia, Valencia, España.Google Scholar
Solow, R.M., Tobin, J. Weizsacker, C.C. and Yaari, M. [1966], Neoclassical Growth with Fixed Factor Proportions, Review of Economic Studies, 33(2), pp. 79–115.Google Scholar
Tobin, J. [1969], A General Equilibrium Approach to Monetary Theory, Journal of Money, Credit and Banking, 1(1), pp. 15–29.Google Scholar
Wadhwani, S. and Wall, M. [1986], The U.K. Capital Stock. New Estimates of Premature Scrapping, Centre for Labour Economics, Discussion Paper n° 245, July.Google Scholar
Wykoff, F.C. [1989], Economic Depreciation and the User Cost of Business-Leased Automobiles, in Jorgenson, D.W. and Landau, R. (eds.), Technology and Capital Formation, Massachusets, The MIT Press, pp. 259–292.Google Scholar