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Measuring Irish Capital

Author

Listed:
  • Mary J. Keeney

    (Central Bank and Financial Services Authority of Ireland)

Abstract
Irish National Income and Expenditure Accounts do not contain information on capital stocks or capital services estimation. Estimates of the national capital stock and the depreciation of its fixed assets are basic macroeconomic aggregates and are integral components for many modelling exercises. This paper presents a detailed asset-level analysis of the stocks and depreciation of Irish fixed assets and the capital formation flows used to derive them. It applies an improved perpetual inventory methodology for calculating depreciation based on best practice employed for the US National Income and Product Accounts (NIPA). The paper shows how the three basic capital variables – the net capital stock, consumption of fixed capital and capital services – are linked through a standard equation for the value of an asset. The paper then presents estimates of the volume of capital services for the Irish economy as well as by asset type. The volume index of capital services (VICS) weights together the growth in the net stock of assets using shares that reflect the relative productivity of the different assets that make up the capital stock i.e. without controlling for the share of housing in the capital stock, total factor productivity will be overestimated for growth accounting purposes.

Suggested Citation

  • Mary J. Keeney, 2007. "Measuring Irish Capital," The Economic and Social Review, Economic and Social Studies, vol. 38(1), pages 25-62.
    • Handle: RePEc:eso:journl:v:38:y:2007:i:1:p:25-62
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    File URL: http://www.esr.ie/Vol38_1/keeney.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Mary J. Keeney, 2010. "A Quality Adjusted Measure of Labour Services for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 41(2), pages 149-172.
    2. O'Donnell, Nuala, 2007. "Housing Wealth and Consumption," Quarterly Bulletin Articles, Central Bank of Ireland, pages 119-136, January.

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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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