Estimation of the depreciation rate of physical and R&D capital in the US total manufacturing sector

Numerous studies on production and cost, the sources of productivity, and endogenous growth have recognized the pivotal role played by physical and R&D capital stocks. Analysis of the contributions of these capitals often requires measures of the stocks of physical and R&D capital, which in turn requires measuring their depreciation rates. In this paper we specify a model of factor demand that allows us to estimate the depreciation rates of both physical and RED capital jointly with other model parameters. The model is estimated for the U.S. total manufacturing sector.