The Measurement of Capital Services in the Czech Republic
When the contribution of capital to aggregate production is to be quantified, a measure of capital services should be used. In this paper I present two experimental measures of capital services for the Czech economy using the OECD methodology. These measures use information on the structure of capital assets by asset type and by the industry in which the capital is used. They weight the contributions of different types of assets by their marginal product instead of by their price, which is the case when using the net capital stock. The analysis shows that growth in the net capital stock, if used as an input into the production function, underestimates the growth of capital input especially in periods of strong investment in highly productive capital assets.
JEL Codes: E23, O11, O12, O47
Keywords: Capital services, growth accounting, production function, total factor productivity
Issued: December 2008
Download: CNB WP No. 11/2008 (pdf, 280 kB)