In Chapter 10, depreciation is assumed to be

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In Chapter 10, depreciation is assumed to be a fixed proportion of the capital stock. This assumption is based on the idea that capital goods have a limited lifespan and lose value over time due to wear and tear, obsolescence, or other factors. Therefore, it is necessary to account for the decrease in the value of the capital stock over time by including an estimate of depreciation in the national accounts. The fixed proportion assumption implies that the rate of depreciation is constant for all types of capital goods and does not depend on factors such as age, usage, or maintenance. This simplifying assumption is often used in empirical studies of economic growth and productivity.

In Chapter 10, Depreciation Is Assumed to Be