Re: US TFP Growth

[Paul Altesman <paltesman@xxxxxxxxxxx>]

I was hoping someone - qualified in the micro/value/capital theory debates
would reply (I am more a macro person).  I think Per has raised an important
point that has always troubled me.  How do the capital theory debates
translate to the position one takes on actually valuing capital in national
accounts?

Clearly for neo-classicals this is not a problem. Even the Perpetual
Inventory Model (a hard fought attempt by some in the UN to be less than
totally neoclassical) carries the genes of a production function - the very
idea of perpetual inventory is a parable.  I imagine that from a marxist or
a sraffian perspective one would have to insist that the price of capital
and the wage rate are linked - so there can be no independent price of K .
Is the argument taken further into how one approaches the practical issue of
capital asset pricing in national accounts?  Can anyone offer some good
references on applying non-neoclassical theory to National Accounts?


At 12:46 PM 3/5/97 +0100, Per Gunnar Berglund wrote:
>(...snip...)
>The UN System of National Accounts (SNA) recommendations take a pragmatic
>stance using the Perpetual Inventory Model to write down real capital
>assets. In that way, the constant-price estimates of 'gross capital
>formation' are diminished by the PIM-computed 'depreciation' to estimate
>the 'net capital formation' which is taken to be the (annual) net addition
>to the capital stock. In this way, a capital stock volume measure can be
>cumulated over a long sequence of years. The period must be long enough to
>allow for the slowest-depreciating assets (buildings) to wear down to a
>negligible level. In practice, this is usually some 50--70 years.
>
>The SNA may be criticised on several grounds:
>
>First, it does not really deal with the fundamental question of what the
>'capitalness' of an object is. According to the PIM approach, a certain
>part (percentage) of the stock is supposed to 'go into' or 'mesh' with the
>annual output, in the same manner as the value of a stock is written down
>in business accounting. This may or may not be a useful concept, but as far
>as I know no serious attempts have been made to justify this concept
>theoretically.
>
>Second, since the writing-down period is very long for some objects, it is
>practically impossible to obtain good estimates of depreciation
>coefficients. And apart from these practical problems, it is impossible to
>judge which historical information basis is objectively relevant. This
>theoretical problem is similar to the adaptive expectations problem: Assume
>that we are to write down a stock of automobiles. What if the 'ordinary'
>lifelength of an automobile has changed over time? Suppose it was twelve
>years in 1975 and fifteen years in 1995. How do we extrapolate this into
>the expected life of a newly produced vehicle? And how exactly do we
>estimate the shape of the so-called survival curve?
>
>Well, Derek, as you can see this whole thing is a muddle, where pragmatic
>solutions have been adopted in place of theoretically sound ones. The
>latter kind is clearly preferrable, provided that they can be made
>operational in a reasonably simple way. The trouble is that nobody, as yet,
>did supply any of those warranted solutions. Maybe you have some
>suggestions?
>
>Let us keep the discussion of this intriguing subject going on the list!
>
>/PGB
>
>> Could I get some feedback please?
>>
>>
>> Derek
>>
>>
>>
>> ______________________________________________________
>>
>> Derek Sicklen
>> Director
>> Australian Economic Analysis Pty Limited
>> Kirribilli NSW 2061 Australia
>> Email: derek@xxxxxxxxxxxxxx
>> ______________________________________________________
>>
>
>