Government and other nonmarket producers’ owned assets Cost of using capital December AEG • Strong support in principle for including a return to capital - viewed as opportunity cost - in the measurement of non-market output • Concern about the rate of return and availability of data for capital stock Global consultation • • • • • 13 responses from “AEG” countries 31 others Opinion divided Conceptual points Practical difficulties Concept 1 • Non-market equals non-profit; why include “profit” for govt? • Measuring non-market output by proxy of costs; capital services (user cost times volume of services) better measure than decline in asset value Concept 2 • Assets should be measured same way for market and non-market • Asset with return Cont 100 80 60 40 20 Value 281 190 116 59 20 57 116 39 59 20 20 • Asset with no return Cont Value 90 281 74 190 Concept 2 cont • Assets should be measured same way for market and non-market • Means including return to capital • Productivity implications Concept 3 • GDP would increase - what would happen to govt operating surplus? • Would increase govt consumption expenditure by same amount • GDP and NDP would increase Concept 4 • • • • Too much modelling Same model as PIM Too much imputation Imputing value not economic impact Rate of return • Opportunity cost of money • Government bond rate • Interest on government bonds divided by face value of bonds Data problems • PIM data is not market price • No data for capital stock – At least for some assets • Where does cfc data come from? • Resource intensive • Much more than PIM? Same questions • Should a return to capital be estimated for non-financial capital used in nonmarket production? 1. 2. 3. 4. 5. Computers, vehicles Roads City parks Inventories Land and other natural resources