Investment and Capital Stock

Although capital stock can be measured in a variety of ways, such as surveys of physical stock or book values, the method most widely used by international statistical agencies, including Statistics Canada, is the perpetual inventory method (PIM).

The PIM is generally favoured as it is a very flexible way of developing time series of capital stocks. The essence of the method is to add each year’s gross investment (gross fixed capital formation) to the capital stock of the previous year and to subtract the consumption of fixed capital. Since the stock needs to be valued at current prices, the model requires price information to inflate the previous years’ stock to current period values. In addition, since the stock gradually deteriorates as it is used, information on the services lives of the assets and their depreciation profile is required. The combination of gross investment flows, price indexes, service lives, and methods of depreciation all figure into the calculation of Canada’s capital stock.

Information on investment flows is mainly sourced from Statistics Canada’s "Capital and Repair Expenditures Survey" which collects information on:

Information on service lives and the age-price profiles of discarded assets gathered by the "Capital and Repair and Expenditures Survey" are used to establish estimated mean service lives. Estimates of services lives are periodically updated and incorporated into the PIM model.

Various price indexes are used to inflate the stock to current period prices. These include industrial product prices, machinery and equipment price indexes, import and export price indexes, new housing price indexes, raw material price indexes and other industry and commodity prices.

The following tables include estimates of Canada’s capital stock and consumption of fixed capital.

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