# RE: st: How to generate a cumulative sum (capital stock)

 From "Nick Cox" To Subject RE: st: How to generate a cumulative sum (capital stock) Date Fri, 26 Oct 2007 17:18:08 +0100

your problem. I can't comment helpfully on what went wrong here because
you don't show us exactly what you typed. My code looks good to me.

A difference between Austin's solution and mine is whether you add
investment at time 1.

Damiano

Sorry for my first message (yes, I was vague. There was another message
concerning the cumulative sum). I'm writing again because I tried to use
your commands in Stata 9.2 but, as for Austin's suggested program, the
new "k" column is empty! Could you help me to solve this odd result?

> Forgetting the panel aspect for a moment,
>
> gen K = k
> replace K = 0.95 * K[_n-1] + I in 2/l
>
> That is, you initialise a variable and
> then -replace- all the first value.
> [_n-1] is Stata's way of referring to
> the previous value.
>
> Now reinserting the panel aspect, you
> need to work
>
> by firm:
>
> but -by:- won't let you work with -in-.
>
> gen K = k
> bysort firm (year) : replace K = 0.95 * K[_n-1] + I if _n > 1
>
> should be closer to what you want.
>
> If you -tsset-, the solution would be better as
>
> tsset firm year
> gen K = k
> by firm: replace K = 0.95 * L.K + I if _n > 1
>
> Nick
> n.j.cox@durham.ac.uk
>
> Damiano Rossi
>
> I need some help to compute a capital stock series from a gross
> investment series. My primary problem is that I have to estimate the
> initial capital stock (K_0 ) for each firm. As a general rule, it is
> used the book value of fixed capital (K) in the first year of data
(e.g.
> 1996) for each firm. How can I command Stata to consider this first
> observation (firm by firm) and then compute a capital stock series,
> using a perpetual inventory and a constant rate of depreciation? A
> previous post doesn't help me much on this point. These are the data.
>
> Panl oif 300 firms, 10 years (1996-2006)
> k = capital stock
> I = capital investment
> d [delta] = 0.05
>
> The evolution of the real capital stock is:
> K_t+i = (1 - d)*K_t+i-1 + I_t+i

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