[PEN-L:33737] Re: Rates of Profit\Measuring K

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

I guess that I would say go ahead and measure profit rates, but keep in
mind that they are very noisy indicator.

Doug asked why not include software in the capital stock?  I don't know
the correct answer, but how the measure the software?  Is the retail price
a correct indicator?  Is an antitrust act led to competition for Windows,
lowering the price, would that mean that business would have less capital?


On Fri, Jan 10, 2003 at 08:18:45PM -0500, Paul_A wrote:
> 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
>

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx