Premium
Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates
Author(s) -
Andersen Matt A.,
Alston Julian M.,
Pardey Philip G.
Publication year - 2011
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aar010
Subject(s) - economics , fixed capital , agriculture , capital (architecture) , interest rate , productivity , capital intensity , capital formation , variable (mathematics) , agricultural economics , econometrics , monetary economics , financial capital , macroeconomics , human capital , mathematics , economic growth , geography , mathematical analysis , archaeology
This paper begins with a review of the methods and assumptions used to measure capital service flows. Two data series on capital inputs in U.S. agriculture are briefly described and compared. We show that measures of capital services are sensitive to the treatment of interest rates. Notably, the use of fixed versus variable market rates significantly affects measures of the quantity and productivity of agricultural capital in the United States. We conclude that when calculating capital usage in U.S. agriculture, the use of a fixed interest rate generates more plausible estimates than the use of an annual market rate.