Good morning everyone,
I am trying to build time series on the real rental rate of capital. To do so I apply this formula:
R = Price of investment / Price of value added *(real interest rate - depreciation of capital)
My issus is with the first division. I only have index-form data (base 2014) on investment goods price and value added price. Is it okay if I use the index of price investment goods and the index of value-added price for this formula?
If so, since I’m using indexes, will my rental rate of capital be an index (base 2014) as well?
Thanks in advance,