The impact of alternative approaches to the measurement of fixed capital

The most recommended method used for the measuring of fixed capital is PIM (Perpetual Inventory Method). In this method, the processes of retirement, decay and obsolescence of fixed assets in national economy are modelled on the basis of average service lives, and the chosen depreciation profile. The paper deals with the comparison of two most common depreciation profiles. The straight line depreciation profile is used by official national accounts statistics. Having no data on second hand market or rental prices, the geometric profile is derived from average service lives. As an alternative, the geometric depreciation profile is applied on the data on most important types of assets for non-market producers sector. As a consequence, the impact on gross domestic product of such change is evaluated. Also the gradual change of service lives was tested on assets with long service lives. Subtle impact of this process on balances of fixed assets and GDP was demonstrated.