Hi everydbody,
Can anyone show me how to calculate capital stock using perpetual inventory method? My dataset consist of 167 countries (panel data)
and some values of the capital stcok are missing for some countries. Below is my do file I attempted but unfortunatly the output I got appeared wrong!
encode country, gen(cty)
xtset cty year
by cty, sort: egen myear=min(year) if gfcf~=.
by cty, sort: ipolate gfcf year, gen(gfcf2)
by cty, sort: gen growth=(gfcf2-L.gfcf2)/L.gfcf2
by cty, sort: replace growth=0 if growt<0
by cty, sort: egen agrowth=mean(growth) if year<(myear+10)
by cty, sort: gen capital=gfcf2/(agrowth+0.06)
by cty, sort: replace capital=. if year>myear
by cty, sort: replace capital=((0.94*L.capital)+gfcf2) if year>myear
By the way, I use 6% depreciation rate and average of 10 years of growth for the formula. The missing values were interpolated using ipolate in Stata.
Thanks
Mukhriz
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