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Comparisons of Real Values of Capital Input in OECD Agriculture, 1973-2011

Authors: V. Eldon Ball, Richard Nehring, Carlos San Juan Mesonada and Yu Sheng. Review of Economics and Finance [{{Comparisons of Capital Input in OECD Agriculture, 1973-2011.}} Review of Economics and Finance, Volume 6, August, 2016.

Thursday 17 March 2016, by Carlos San Juan


This paper provides a farm sector comparison of real values of capital input for 17 OECD countries for the period 1973-2011. The starting point for construction of a measure of capital input is the measurement of capital stock. Estimates of depreciable capital input are derived by representing capital stock at each point of time as a weighted sum of past investments. The weights correspond to the relative efficiencies of capital goods of different ages, so that the weighted components of capital stock have the same efficiency. The capital stocks of land are measured as implicit quantities derived from balance sheet data. We convert estimates of capital stock into estimates of capital service flows by means of capital rental prices. Implicit rental prices for each asset are based on the correspondence between the purchase price of the asset and the discounted value of future service flows derived from that asset. Finally, comparisons of relative levels of capital input across countries require data on relative prices of capital input. We obtain relative prices for capital input via relative investment goods prices, taking into account the flow of capital input per unit of capital stock in each country.

Attached documents

  • This paper provides a farm sector comparison of relative levels of capital input for 17 OECD countries for the period 1973-2011, with an explicit distinction between land and depreciable assets. Methodologically, we adopt the constant efficiency model to derive capital services from capital stocks and construct the purchasing power parity between countries for crosscountry comparison. Our estimates show that, after accounting for cyclical fluctuation in the relative price of capital inputs, fifteen of the sixteen countries in the comparison had higher levels of capital input relative to the United States in 2011 than at the beginning of the sample period in 1973. Moreover, our analysis shows that increases in relative capital use on farms in OECD countries were accompanied by change in the structure of the capital input, away from land and towards depreciable capital items.

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