The role of fixed capital depreciations for TFP growth: evidence from firm level panel data estimates

Abstract

The role of accounting depreciation rates and the stocks of fixed capital has been well established in the literature. By exploring available evidence on the value of fixed assets in certain countries, this paper makes use of firm level data on fixed capital depreciations over the period 1990–2008 from a group of OECD countries along with panel data estimations to investigate their role for total factor productivity (TFP) as it is defined through growth accounting, since different capital depreciation profiles imply different rates of capital accumulation and, therefore, different estimates of TFP. The empirical results indicate a positive relationship between the two variables under study.