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Commercial Buildings Capital Consumption and the United States National Accounts
Author(s) -
Bokhari Sheharyar,
Geltner David
Publication year - 2019
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12357
Subject(s) - depreciation (economics) , consumption of fixed capital , economics , national accounts , consumption (sociology) , asset (computer security) , gross fixed capital formation , capital (architecture) , value (mathematics) , capital asset , econometrics , agricultural economics , capital formation , macroeconomics , microeconomics , finance , mathematics , financial capital , statistics , social science , archaeology , sociology , profit (economics) , history , foreign direct investment , computer security , computer science
Commercial buildings are a major asset class, over 30 percent of the value of the stock of all produced assets according to the BEA. Yet, US commercial buildings depreciation has not been comprehensively studied since the highly influential work of Hulten and Wykoff almost 40 years ago. This paper's major contributions include: (i) More flexible and precise estimation of the net depreciation value/age profile, allowing much finer characterization of the building life cycle; (ii) Explicit quantification of the land value component of commercial property value, enabling net depreciation to be quantified as a fraction of remaining structure value; (iii) Inclusion of capital improvement expenditures, allowing estimates of “gross depreciation” (total capital consumption); and (iv) Implications of the paper's findings to and for the national accounts.