Working Paper: NBER ID: w1774
Authors: Michael J. Boskin; Marc S. Robinson; John M. Roberts
Abstract: Government capital formation raises a number of issues important to national economic well-being, yet the U.S., unlike most advanced countries, does not account for capital in its formal budget documents. We estimate depreciation of government capital using a methodology developed by Hulten and Wykoff which is based on used asset price data. We estimate a federal government net nonresidential capital stock of over $800 billion in 1984, more than 20% higher than estimated by the BEA. We also find much larger net federal investment since World War II than the BEA. The behavior of military and civilian structures and equipment is also examined.We analyze the potential importance of these results for measuring the net national savings rate, national wealth, the trend in government capital formation relative to private capital formation, and the relationship between net investment and deficits.
Keywords: Federal Government; Capital Stock; Net Investment; Depreciation; National Saving
JEL Codes: H54; E22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Methodology leads to federal government net nonresidential capital stock estimate that is over 20% higher than BEA estimate (H54) | Understanding national wealth and net national saving rates (E21) |
| Difference in estimates due to approach to estimating depreciation (C51) | More accurate representation of government capital formation (H54) |
| Proper measurement of government investment and capital (H54) | Accurate fiscal policy analysis (E62) |
| Government investments can complement private sector activity (H54) | Enhance productivity (O49) |
| Proper measurement of government investment and capital (H54) | Influence perceptions of deficits and overall economic health (E66) |