NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Wendy Li

Bureau of Economic Analysis
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Suitland, MD 20233

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NBER Working Papers and Publications

July 2016Depreciation of Business R&D Capital
with Bronwyn H. Hall: w22473
We develop a forward‐looking profit model to estimate the depreciation rates of business R&D capital. By using data from BEA and NSF between 1987 and 2007, and the newly developed model, we estimate both constant and time‐varying industry‐specific R&D depreciation rates. The results comprise a complete set of R&D depreciation rates for major U.S. high‐tech industries. They align with the main conclusions from recent studies that the rates are in general higher than the traditionally assumed 15 percent and vary across industries. The relative ranking of the constant R&D depreciation rates among industries is consistent with industry observations and the industry‐specific time‐varying rates are informative about the dynamics of technological change and the levels of competition across indust...
 
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