Premium
Measurement of Capacity Depreciation Based on Engineering Data
Author(s) -
Penson John B.,
Hughes Dean W.,
Nelson Glenn L.
Publication year - 1977
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 - 10.2307/1240022
Subject(s) - depreciation (economics) , economics , investment (military) , production (economics) , capital (architecture) , econometrics , capacity utilization , aggregate (composite) , physical capital , agricultural economics , constant (computer programming) , microeconomics , capital formation , financial capital , computer science , human capital , profit (economics) , composite material , materials science , archaeology , politics , political science , law , programming language , history , economic growth
The widely used estimates of annual capacity depreciation for selected types of farm producer capital published by the US DA rest on the assumption that the amount of capital consumed annually equals a constant fraction of the existing capital stocks. This study demonstrates, through the use of agricultural engineering data, that the productive capacity of farm tractors deteriorates in a concave rather than the convex pattern suggested by present USDA estimates. The implications for studies estimating aggregate production functions based on factor shares or farm investment demand equations are discussed. Finally, recommendations for change to selected sector economic accounts are made.