Measuring Capital - OECD Manual 2009
Second edition
Capital - in particular of the physical sort - plays several roles in economic life: it constitutes wealth and it it provides services in production processes. Capital is invested, disinvested and it depreciates and becomes obsolescent and there is a question how to measure all these dimensions of capital in industry and national accounts. This revised Capital Manual is a comprehensive guide to the approaches toward capital measurement. It gives statisticians, researchers and analysts practical advice while providing theoretical background and an overview of the relevant literature. The manual comes in three parts - a first part with a non-technical description with the main concepts and steps involved in measuring capital; a second part directed at implementation and a third part outlining theory and a more complete mathematical formulation of the measurement process.
Introduction
Capital stock featured in two places in the 1993 SNA, as part of compilation of balance sheets and as a tool to derive estimates of depreciation or consumption of fixed capital (CFC). How is gross capital stock estimated? Basically by cumulating gross fixed capital formation (GFCF) year by year and deducting retirements. Because it makes no sense to aggregate expenditures undertaken in different years without adjusting for the difference in prices between those years, all capital stock figures are in “constant prices”. These prices may be the prices of the current year, in which case past expenditures are adjusted to the current price level or may be expressed at the prices of a given year, usually the one which is the base year for constant price national accounts.