Estimation of a Variable Rate of Depreciation: A Dummy Variable Approach
Ingmar Prucha ,
( 8 )
Structural Change and Economic Dynamics

Many important economic problems require measures of both physical and R&D capital. Except for some recent studies, there have been relatively few contributions in the literature that provide econometric estimates for the depreciation rates of physical and R&D capital. One reason for the relative paucity of such econometric studies may be that if the depreciation rates are viewed as unknown parameters, or as a functions of unknown parameters, then the corresponding stocks of physical and R&D capital are also unobserved, resulting in a formidable estimation problem.

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