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# Empirical Economics

Registered User regular
edited October 2008
So, anyone who took an intro course in micro or macro probably ran into some sort of equation somewhere talking about output being a function of capital and labor, say Y = F(K,L). In the macro sense, this is usually taken to mean Y = total output of an economy, K = total capital in the economy, L = the size of the total labor force.

Empirically, there are pretty obvious ways to estimate Y and L; typically, we estimate Y by measuring real GDP (at least when talking about a national economy), and L by measuring the work force, or even just by approximating by saying it's some percentage of total population. K is a different story.

My question is: when viewing a national economy, what would be the best way to estimate capital stock? If you look at the BEA's account of real GDP, there's a subheading of "Gross private domestic investment." Would that be it? What does that actually measure?

Steam: simon moon
Simon Moon on

## Posts

• Registered User
edited October 2008
Gross private domestic investment is basically just a fancy way of saying investment when calculating GDP.

Capital stock is the accumulation of physical capital in an economy, so yeah, investment.

*Obligatory sentence about GDP being a horrible indicator*

blah on
• Registered User regular
edited October 2008
Well, except investment is a flow, and I'm looking for a measure of the (net?) stock.

I think I found it. The BEA reports Fixed Assets on a different set of tables than their NIPA tables.

Simon Moon on
Steam: simon moon