Hi everyone
When using the PIM method to calculate capital depreciation rates in a model with no population growth, is the data used divided by the population? For example, in two periods, I use the following: gross fixed capital formation, average consumption of fixed capital, and gross domestic product,
Data = \{Y_{2019}, Y_{2020}, I_{2019}, I_{2020}, CFK\}
Equations:
K_{2020} = (1 - \delta)*K_{2019} + I_{2019}
K_{2021} = (1 - \delta)*K_{2020} + I_{2020}
\frac{1}{2} ( \frac{K_{2019}}{Y_{2019}} + \frac{K_{2020}}{Y_{2020}}) = \frac{K_{2019}}{Y_{2019}}
\frac{1}{2} ( \frac{\delta K_{2019}}{Y_{2019}} + \frac{\delta K_{2020}}{Y_{2020}}) = CFK
unknown variables = \{ K_{2019}, K_{2020}, K_{2021}, \delta \}
Should the data be per capita?