The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Capital Measurement

  • W. Erwin Diewert
  • Paul Schreyer
Reference work entry


Capital measures provide an indicator of wealth and of capital services, the contribution of assets to production. The wealth stock is the market value of assets, whereas capital services are measured in proportion to the quantity of past investment, adjusted for the relative efficiency of different vintages and capital goods in production. Although the two measures of capital are different, they are derived from a single theoretical framework whose centrepiece is a fundamental equilibrium relationship between stocks and flows of capital. Index number theory is used to guide the empirical implementation of stock and flow measures.


Aggregation Asset inflation Asset pricing Asset values Böhm-Bawerk, E. Capital measurement Capital services Capital utilization Depreciation Fixed base (chain) indexes Geometric (declining balance) depreciation model Index numbers Interest, market rates Linear efficiency decline model One-hoss shay efficiency model Price and quantity indexes Producer equilibrium Production function Rates of return Rental price Stocks and flows Straight line depreciation model User cost Value ratios Walras, L. 

JEL Classifications

C43 E01 E22 O47 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • W. Erwin Diewert
    • 1
  • Paul Schreyer
    • 1
  1. 1.