A recent article suggests that the concept of “capital” cannot be routinely applied to the intangible items usually referred to as intellectual, social or human capital. The authors question whether ideas can be capital. We believe that this inquiry (which may reflect more general doubts) fails to capture the essential nature of capital. A reexamination of the nature of capital leads us to ask ...

This study investigates whether the capital market values the efficiency of firms. After tracing stock returns and efficiency changes of 399 listed insurance firms in 52 countries during the 2002-2008 period, the paper reports a positive and statistically significant relationship between profit efficiency change and market adjusted stock returns. However, there is no robust evidence that cost e...

This paper studies how frictions, both real and financial, interact with capital tax policy in a dynamic, general equilibrium model with heterogeneous firms. Comparative statics show that tax policy can have substantially different effects depending upon the frictions present. Analytical and numerical exercises show that accounting for firm heterogeneity is important when evaluating the respons...

a r t i c l e i n f o For a set of 14 developing countries I evaluate whether differences in wage gaps between sectors – estimated from individual-level wage data – have meaningful effects on aggregate productivity. Under the most generous assumptions regarding the homogeneity of human capital, my analysis shows that eliminating wedges between wages in different sectors leads to gains in output...

We analyze the democratic politics and competitive economics of a ‘golden rule’ that separates capital and ordinary account budgets and allows a government to issue debt to finance only capital items. Many national governments followed this rule in the 18th and 19th centuries and most U.S. states do today. We study an economy with a growing population of overlapping generations of long-lived bu...

This paper revisits the question whether capital in a competitive equilibrium is overaccumulated from the perspective of the social planner in an incomplete market economy with risky human capital accumulation. As in Dávila, Hong, Krusell and RíosRull (2012), we consider a constrained social planner who cannot complete markets, but can improve welfare by only internalizing how individual alloca...

Executive Summary Predictability in today’s capital-intensive markets is a challenge. Project cost overruns are one of the areas that are out of control and contributing to this dynamic. CAPEX planning, returns on invested capital and cash flow are all impacted negatively by these inefficiencies. Tweaking the project execution process can result in incremental improvement, but does not really m...

We show that the value of corporate diversification increased during the 2007–2009 financial crisis. Diversification gave firms both financing and investment advantages. First, conglomerates became significantly more leveraged relative to comparable focused firms. Second, conglomerates’ access to internal capital markets became more valuable not just because external capital markets became more...

CONTENTS 1. Introduction 2. Measurement and methodology 2.1 The definition of fixed capital stock 2.2 The perpetual inventory method 2.3 The lifetime and age of capital stock 3. Privatisation and the institutional classification of capital stock 4. Growth in real fixed capital stock 5. The composition of fixed capital stock 5.1 Fixed capital stock by kind of economic activity 5.2 Fixed capital ...

Data envelopment analysis (DEA), originally developed to study production efficiency ofmicro-level organizations, has recently been used to adopt a production-frontier approach to the analysis of international macroeconomic growth and convergence patterns. DEA methods, however, are known to provide biased estimates of the production frontier and efficiency. We employ recent results from the sta...