An Optimization Procedure for Estimating the Stock of Capital: Application to Ten Production Sectors of Dubai

• Belaid RETTAB ^[2] ; Ton KWAAK ^[3] ; Azzeddine AZZAM ^[1]
  1. [1] University of Nebraska–Lincoln

     University of Nebraska–Lincoln

     Estados Unidos

     
  2. [2] Dubai Chamber of Commerce & Industry
  3. [3] EIM Business & Research Policy

  Mostrar afiliaciones +
• Localización: Estudios Economicos Regionales y Sectoriales : EERS: Regional and sectoral economic studies : RSES, ISSN 1578-4460, Vol. 10, Nº. 1, 2010, págs. 107-114
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • This paper develops and optimization procedure for estimating the capital stock using time series data on GDP, labor, and gross fixed capital formation. By minimizing the gap between observed and attainable GDP, subject to the constraint that capital grows according to the perpetual inventory formula, and GDP is related to employment and the capital stock through the Cobb-Douglas production function with constant returns to scale; the optimization procedure yields estimates of the capital stock, the production function parameters, the rate of capital retirement and depreciation, and the rate of total productivity growth.

• Referencias bibliográficas
  • Adams, C. and D. Coe 1990, A systems approach to estimating the natural rate of unemployment and potential output for the United States, IMF...
  • Bansak, D., N. Morin, and M. Starr, 2007. Technology, capital spending, and capacity utilization, economic Inquiry 45, 632-645
  • Congressional Budget Office, August 2001, CBO's methods for estimating potential output: An Update. Available at http://www.cbo.gov/ftpdoc.cfm?index=3020\&type=0\&sequence=0
  • Epstein, L. G. and M. Denny. 1980. Endogenous capital utilization in a short-run production model: theory and empirical application, Journal...
  • Goldsmith, R. W. 1952. A perpetual inventory method of national wealth, in: Studies in Income and Wealth, Conference on Research in Income...
  • Hernandez, J. A. M. Ignaci, 2005, Econometric estimation of a variable rate of depreciation of the capital stock, Empirical Economics 30,575-595.
  • Lock, J. D., 1985. Measuring the value of capital by direct observation, Review of Income and Wealth 31, 127-138.
  • Miller, E. D., Can a perpetual inventory capital stock be used for production function parameter estimation, Review of Income and Wealth 36,...
  • Oulton, N., 2004, Productivity versus welfare: or GDP versus Weitzman's NDP," Review of Income and Wealth 50, 329-355.
  • Terregrossa, R. A., 1995, Measuring Capital Replacement Requirements Using a Multivariate Cost Function, International Advances in Economic...
  • Torres, R. and J. P. Martin, 1990, Potential output in the seven major OECD countries, OECD Economic Studies no. 14, 127-149