DEPRECIATION OF DURABLE GOODS IN AN UNSTABLE ECONOMY

ARIEL COREMBERG

OECD-Paris

Congreso; OECD MEETING OF CANBERRA II GROUP AND JOINT NESTI-CANBERRA II SESSION ON R&D CAPITALISATION; 2007

OECD

The main purpose of this paper is to identify the depreciation pattern in an unstable economy:the Argentina case, using vintage asset prices by means of Hulten and Wycoff (1981) approach.The example of Argentina during 1998-2002 is very important because during that period, therewas the biggest & longest economic depression of its modern economic history. As aconsequence, the country abandoned the Convertibility Plan with currency mega devaluation(default & desdoralization) DDD which caused a high instability in relative prices that couldchallenge the measure of capital stock, gdp and productivity performance in so unstableeconomy.The paper briefly discusses the depreciation concept, the importance in economic analyses andthe information problems in the used durable goods markets according to SNA93, OECDMeasuring Capita l Manual and the most recent literature.Applying the Hulten and Wykoff (1981) approach to Argentine case (farm tractors, aircrafts,cars, buses, trucks and light commercial vehic les), the econometric analysis would confirm thehypothesis of convex depreciation for almost every case under analyses, but overall, it wouldnot confirm any geometric case.We also found that there was a high instability of age price profile in the argentine economy andimportant distortions on price of durables goods capture by “representative official index”.This findings support the importance of valuation of the stock of durable goods taking intoaccount the age price profile performance; instead of the use of standard depreciation withoutempirical support in the PIM context or the imputation of an age price profile of the referenceyear to the whole stock series supposing its stability.* This paper is an extension of an annex of Coremberg-INDEC (2004): “Capital Stock in Argentina:Sources, Methods and Series ”. Comments from Daniel Heymann, Alberto Fracchia, Walter SosaEscudero and Luis Suárez as well as the assistance of L.M. Camadro, L. Frank and A. Olgiatti on thegathering of the sources of information and the consistency of the database, are appreciated. The opinionsexpressed are solely the responsibility of the author.