Regional Seminar on Developing a Program
for the Implementation of the 2008 SNA and
Supporting Statistics
Leyla BAYRAK NEVES DE ALMEIDA
11-13 September 2013
Ankara - Turkey
1
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
CONSUMPTION OF FIXED CAPITAL
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
CONSUMPTION OF FIXED CAPITAL
Definition:
In SNA, consumption of fixed capital is defined in
general terms as the decline of the current value of
the stock of fixed assets owned and used by a
producer, as a result of physical deterioration,
normal obsolescence or accidental damage, during
the course of the accounting period.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
CONSUMPTION OF FIXED CAPITAL
Exclusions from the definition:
The value of fixed assets destroyed by acts of war or
exceptional events such as major natural disasters
which occur very infrequently. Such losses are recorded
in the System in the account for “Other changes in the
volume of assets”.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
ESTIMATING GROSS CONSUMPTION OF FIXED CAPITAL
• The gross consumption of fixed capital can be estimated
either by surveys of enterprises or by the “perpetual
inventory method” (PIM).
• Corporate accounting registers depreciation of fixed capital,
but these records are not generally suitable for national
accounts purposes and are not used for calculation of
consumption of fixed capital.
•
0
• In order to be consistent with other entries in the same
production account, consumption of fixed capital should be
measured at current replacement cost.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
ESTIMATING GROSS CONSUMPTION OF FIXED CAPITAL
• Estimates of consumption of fixed capital are
obtained by the PIM method and PIM provides
theoretically appropriate estimates for economic
analysis.
• The basic requirements for the PIM are namely
statistics on gross fixed capital formation, price
indices for capital assets and information on average
service lives for assets.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
PERPETUAL INVENTORY METHOD - PIM
Definition:
The Perpetual Inventory Method (PIM) generates an
estimate of the capital stock by accumulating past
purchases of assets over their estimated service lives.
The standard procedure is to use the PIM to estimate
the gross capital stock, apply to it depreciation factors
to calculate consumption of fixed capital and obtain
the net capital stock by subtracting accumulated
capital consumption from the gross capital stock.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
Year
aquisitions
aquisitions
GFCF
Asset A
Asset B
Retirements
(year
end)
(year
end)
total
Asset A
Total
Asset A
Asset
B
10
10
0
10
2
Asset B
total
Stock (year
end)
2
8
1
10
2
10
15
25
20
15
35
4
1,5
5,5
27,5
3
10
15
25
30
30
60
6
3
9
43,5
4
10
15
25
40
45
85
8
4,5
12,5
56
5
10
15
25
50
60
110
10
6
16
65
15
15
10
40
75
115
8
7,5
15,5
64,5
7
0
10
30
75
105
6
7,5
13,5
51
8
0
10
20
75
95
4
7,5
11,5
39,5
9
0
10
10
75
85
2
7,5
9,5
30
10
0
10
0
75
75
7,5
7,5
22,5
11
0
0
75
75
7,5
7,5
15
12
0
15
0
60
60
6
6
9
13
0
15
0
45
45
4,5
4,5
4,5
14
0
15
0
30
30
3
3
1,5
15
0
15
0
15
15
1,5
1,5
16
0
15
0
0
0
6
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
REQUIREMENTS TO USE THE PIM
• Statistics on gross fixed capital formation
• Price indices for capital assets
• information on average service lives for assets.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
• Countries which have no information related to
Capital´s Service Life, use OECD’s average service life
of investment.
• Significant studies about the service life of assets in
Turkey are not available, therefore OECD average
service lives are use for this calculation.
• According to OECD recommendation, average service
lives of construction, machinery and equipment
investments, currently used for PIM estimates, are
respectively 41 years and 31 years.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
ESTIMATING GROSS CONSUMPTION OF
FIXED CAPITAL IN TURKEY
• Information on gross fixed capital formation in each
year is required for calculations.
• Within the methodological revision the PIM was
developed for estimates of the consumption of fixed
capital covering the period since 1998. In order to
apply the PIM, information on series of annual gross
fixed capital formation in constant prices for
machinery and equipment and for construction is
required.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
• Data on fixed capital formation series, beginning
from 1948 at 1998 (base year) constant prices are
used to produce the estimation of consumption of
fixed capital at constant prices.
• Estimates at current replacement cost are obtained
by relating the constant price estimates. The price
indices used for relating the constant price estimates
are derived from investment at current and at 1998
constant prices.
23.7.2016
12
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
Estimates are derived using a delayed linear function.
This survival function shows that the surviving assets
are reduced by a constant amount each year.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
Conclusion:
Consumption of fixed capital has been estimated by
TURKSTAT for the period starting in 1998, but data
hasn’t been published due to the ongoing revision.
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
PLANNED STUDIES
• GCFC estimation by sectors.
• If the PIM is used, sectors breakdown cannot be
more detailed than statistics on gross fixed capital
formation (GFCF). So GFCF estimation should be
done by sectors.
• To be able to have more reliable estimation of
Consumption of Fixed Capital, it is necessary to have
a comprehensive and detailed information of the
service lives of assets .
National Seminar on Developing A Program
for the Implementation of the
2008 SNA and Supporting Statistics in Turkey
10 September 2013 / Ankara - Turkey
Thank you for your attention!