EQUIPMENT INVESTMENT IN CURRENT PRICES

In this appendix I discuss my estimation of investment in agricultural and nonagricultural equipment. I begin by calculating the sum of domestic machinery production and machinery imports in current prices, which, assuming this equipment does not go into inventories or as an intermediate input into final machinery, will yield the sum of gross annual investment in durable equipment. I then break this figure down into agricultural and nonagricultural equipment using independent studies of agricultural investment. From this information on agricultural and nonagricultural investment in equipment, I compile indexes in current and constant 1913 prices using agricultural and nonagricultural equipment price deflators. These indexes are applied to Vainshtein's estimates of 1913 investment in agricultural and nonagricultural equipment to obtain value series of net equipment investment in current and constant 1913 prices. These calculations are shown in Table I.1. The equipment estimates in constant 1913 prices are then contrasted with Kahan's estimates of net equipment investment for the period 1890 to 1913, derived from his net capital stock series.

It is difficult to evaluate the reliability of the current price investment series (panel A) as this will depend upon the reliability of the series on domestic equipment production and imports. The data on machinery imports should be reasonably reliable. The data on domestic machinery production, however, should be less trustworthy, primarily because reliable industrial production statistics were not available before the Varzar studies for 1900 and 1908.