[PEN-L:33735] Rates of Profit\Measuring K

[Paul_A <paul_a@xxxxxxx>]

You make a very valid point.  Also, as I understand it, you are saying that
the measurement is empirically difficult but not conceptually flawed (since
we are unabashedly measuring the cost of capital in the context of a ratio
and NOT pretending to 'measure capital' to then make 'what if' comparisons).

In that case, and since we will never get better historical data, where do
you thing we should go with this line of inquiry:

- proceed, but beware (use sensitivity analysis, trust only big enduring
trends, etc)?
- forget about this line of approach?
-  do the analysis but avoid any conclusions?

Paul

At 09:39 AM 1/10/2003 -0800, you wrote:
> To beat on a not yet dead horse, of the major problems in estimating a
> rate of profit is the denominator -- the capital stock.  Most of the
> debates center around the measurement of total profits, but the capital
> stock is the truly difficult part to measure.
>
> In recent decades, investment has been shifting from long-lived capital
> goods and buildings to capital goods of a very uncertain lifetime.  I
> believe that even software is now suppose to be part of the capital stock,
> but I'm not sure.
>
>  --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael@xxxxxxxxxxxxxxxxx