Dear all,
I need some help to compute a capital stock series from a gross investment series. My primary problem is that I have to estimate the initial capital stock (K_0 ) for each firm. As a general rule, it is used the book value of fixed capital (K) in the first year of data (e.g. 1996) for each firm. How can I command Stata to consider this first observation (firm by firm) and then compute a capital stock series, using a perpetual inventory and a constant rate of depreciation? A previous post doesn't help me much on this point. These are the data.
Panl oif 300 firms, 10 years (1996-2006)
k = capital stock
I = capital investment
d [delta] = 0.05
The evolution of the real capital stock is:
K_t+i = (1 - d)*K_t+i-1 + I_t+i
Hope someone help me. I would appreciate other suggestions too! Thanks.
Damiano Rossi
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