Capital Services In U.S. Agriculture: Concepts, Comparisons, And The Treatment Of Interest Rates
Measures of capital services are used in studies of production and to inform policies related to growth and development. A variety of methods have been used to measure capital stocks and service flows. The authors briefly review the methods commonly used to measure capital service flows, and the main assumptions. They then quantify the substantial differences between the newly constructed InSTePP series on capital use in U.S. agriculture and a comparable USDA series. They show that measures of capital services are sensitive to the treatment of interest rates, notably the use of fixed versus variable market rates, and they demonstrate the implications for measures of the quantity and productivity of agricultural capital in the United States.