Affiliations: [a] Department of Economics, Southern Illinois
University, Carbondale, IL 62901, USA. Tel.: +1 618 453 5070; Fax: +1 618 453
2717; Email: [email protected]
| [b] Capital Markets Department, First National Bank of
Chicago, Chicago, IL 60670, USA
Correspondence:
[*]
Corresponding author.
Note: [1] The views expressed in this article are those of the author and not of the
First National Bank of Chicago.
Abstract: It is the flow of capital services, instead of the capital stock, along with the
flows of other inputs, which is related to the flows of outputs in economic
theory of cost and production. In applied research, quite often to capture the
dynamic phenomena which occur within a year, there is a need to use quarterly
data which may not be captured by annual data. However, quarterly data on
capital input and the cost of capital are not readily available. Thus, in this
paper the quarterly real and nominal aggregate net capital stock, flow of
capital services (capital input), and the user cost of capital are constructed
from 1948: I to 1993: IV. In the aggregation of net capital stock, we have
combined four categories, i.e., nonresidential structures, nonresidential
producers' durable equipment, residential structures and equipment, and business
inventories. Following Jorgenson et al. [12], we then constructed aggregate
capital input by using the Tornqvist aggregation index over these four
categories. Finally, the composite cost of capital is obtained by dividing the
revenue of capital by the aggregate capital input.
Keywords: Quarterly aggregate capital stock, quarterly aggregate capital input, quarterly cost of capital
