help stockcapit
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Title

     Calculates physical capital stock by the perpetual-inventory method



Syntax

        stockcapit investvar gdpvar [if] [in] [, options]


    options               Description
    -------------------------------------------------------------------------
    Main
      capital(newvar)     specifies the new capital variable to be created
      delta(#)            specifies the constant depreciation rate; default
                            is delta(0.05)
    -------------------------------------------------------------------------

    You must tsset your data before using stockcapit; see tsset.  The
      stockcapit command works for both Time series and Panel data.
    varlist must not contain time-series operators; see tsvarlist.
    by is not allowed with stockcapit; see [D] by for more details on by.



Description

    stockcapit calculates physical capital stock by the perpetual-inventory
    method using investvar (Investment variable) and gdpvar (GDP variable).
    The initial capital stock is computed as in Harberger (1978). See Nehru
    and Dhareshwar (1993) and King and Levine (1994) for more details
    concerning the measurement of initial capital stock. As pointed by Barro
    and Sala-i Martin (2004) the calculated capital stock for the first years
    depends on the initial guess of initial capital stock and hence is
    unreliable. But as initial capital depreciates, the computed stocks
    become more and more precise.



Options

        +------+
    ----+ Main +-------------------------------------------------------------

    capital(newvar) specifies the name of the new capital variable to be
        created.  You must provided this variable name, otherwise stockcapit
        will abort with an error message.

    delta(#) indicates the constant depreciation rate; default is
        delta(0.05).  Some authors like Nehru and Dhareshwar (1993) state
        that the choice of the depreciation rate is more important than the
        initial capital stock. They argue that an error in the depreciation
        rate have an effect on both initial and final capital stocks and
        these errors have a propensity to reinforce one another. The choice
        of the default as 0.05 is based on Bosworth and Collins (2003).



Citation

    stockcapit is not an official Stata command. The usual disclimers apply:
    all errors and imperfections in this package are mine and all comments
    are very welcome.



Remarks

    The package stockcapit rely on the package tsspell. Hence you must
    install tsspell to make stockcapit work. To install the package tsspell
    from within Stata, please click on: ssc install tsspell, replace. Note
    that you must be connected to Internet for this action to work.



Return values

   Macros
       r(capital)          Created capital stock variable



Examples

    We open the dataset stockcapitdatapand.dta. The data are panel data from
        Penn World Table 7.0 which contain 190 countries from 1950 to 2009.

    use http://fmwww.bc.edu/repec/bocode/s/stockcapitdatapand.dta, clear

    We compute the capital stock by placing first the investment variable and
        then the GDP variable. We enter the name of the capital stock
        variable to be created as capital.

    stockcapit invest gdp, capit(capital)

    This creates the capital stock variable named capital. By default it is
        labeled as "Calculated Physical Capital Stock". To see this, we type:

    des capital

    The stockcapit command can also be applied on a single time series data.
        To illustrate this, we open the following dataset containing a time
        series data.

    use http://fmwww.bc.edu/repec/bocode/s/stockcapitdatatimes.dta, clear

    stockcapit invest gdp, capit(capital)

    We observe that the capital stock variable named capital is created. By
        default it is labeled as "Calculated Physical Capital Stock".



References

    Barro, R.J. and Sala-i-Martin, X.: 2004, (Second Edition) "Economic
    Growth", McGraw-Hill.

    Bosworth, B.P. and Collins, S.M.: 2003, "The empirics of Growth: An
    Update", Brookings Papers on Economic Activity 2:113-206.

    Harberger, A.: 1978, "Perspectives on Capital and Technology in Less
    Developed Countries" in M.J. Artis and A.R. Nobey (eds.), Contemporary
    Economic Analysis (London: Croom Helm).

    Heston, A., Summers, R. and Aten, B.: 2011, "Penn World Table Version
    7.0", Center for International Comparisons of Production, Income and
    Prices at the University of Pennsylvania, March.

    King, R. G. and Levine R.: 1994, "Capital Fundamentalism, Economic
    Development, and Economic Growth", Carnegie-Rochester Conference Series
    on Public Policy, Vol. 40.

    Nehru, V. and Dhareshwar, A.:  1993, "A New Database on Physical Capital
    Stock: Sources, Methodology and Results", Rivista de Analisis Economico 8
    (1): 37-59.



Author

    Diallo Ibrahima Amadou, zavren@gmail.com



Also see

    Online:  help for generate, egen, tsspell (must be installed)