Constructing BEA Highways and Streets Net Wealth

Transcript:Constructing BEA Highways and Streets Net Wealth:
Constructing BEA Highways and Streets Net Wealth Stocks with Detailed Types of Investment and Engineering-based Estimates of Depreciation Authors: Barbara M. Fraumeni, Central University of Finance and Economics, Beijing, China & National Bureau of Economic Research Robert Kornfeld, U.S. Bureau of Economic Analysis Discussant: Eve Smith, Assistant Deputy Director, Non-Financial Assets, ONS Introduction Objective: Evaluate the impact of using detailed capital outlays and alternative depreciation methods on highway and street wealth stocks. Official BEA: The FAAs (official BEA) provide annual estimates of fixed investment, economic depreciation and net wealth capital stocks for highways and streets and over 100 other government and private fixed assets. The FAAs provide highways and streets publicly available data in current- and constant-prices from 1901 (investment) or 1925 (wealth stocks and CFC) to the present. Alternate BEA Research: Kornfeld and Fraumeni (2022) disaggregated highway investment into detailed types. Current Paper: Presents two further scenarios: The substitution of Picher-based pavement profiles for pavement rates of depreciation The introduction of varying imputed rates of geometric depreciation rates to the more detailed capital outlays Official BEA and Alternative BEA Sources and Methodologies Official BEA Sources: Annual estimates of fixed investment, economic depreciation, and net wealth capital stocks. Publicly available data from 1901 (investment) or 1925 (wealth stocks and CFC). Methodology: Use of the Perpetual Inventory Method (PIM) Same constant-price estimates of investment in all calculations Assume a Geometric Pattern occurs Alternate BEA: Disaggregating Capital Outlays Table 1: Service Lives Assumptions and Geometric Rates Alternate BEA: Disaggregating Capital Outlays New Scenario: Picher-based paving sources and methodology Picher estimated efficiency profiles for pavement with an assumed lifetime of 20 years, as contrasted with an infinite lifetime with a geometric rate of depreciation. Picher-based productive stock estimates were converted to wealth stock estimates to allow a comparison to the official BEA and alternative BEA wealth stocks. Productive stocks depend on the efficiency of an asset only in the current period, whereas wealth stocks depend on the efficiency of an asset in the current and all future periods. (Lightbulb example) Productive stocks are always greater than wealth stocks if the annual efficiency levels are the same, except in the special case of a geometric rate. Comparison of Alternate BEA and Picher-based estimates Comparison of Alternate BEA and Picher-based estimates New Scenario: Varying geometric depreciation rates Analysis so far indicates official BEA geometric rate of depreciation for highways and streets is too low Challenges