This paper constructs a polynomial-benchmark model to estimate gross and net capital stocks by explicitly estimating implicit retirement rates and depreciation rates. The model is applied to Korean data (1953-86) where such data as national wealth sur...
This paper constructs a polynomial-benchmark model to estimate gross and net capital stocks by explicitly estimating implicit retirement rates and depreciation rates. The model is applied to Korean data (1953-86) where such data as national wealth survey, national income accounts and industrial census are available. Three alternative series of capital stock estimates are generated and compared with previous estimates. It is shown that the use of a pure perpetual inventory model or a benchmark-year method alone may introduce a significant bias in the measurement of capital stocks for developing economies.