Valuing Capital services
Capital input (K)
PIM based - constructed from expenditures on consumer durables.
Value of capital services:
= the price of capital services per unit of the net capital stock multiplied by the net capital stock K .
Where the price of capital services is calculated as
r = real rate of return (4%)
d = depreciation rate (20%)
P(t) = price index of consumer durables
Again, some double counting…..