Definition: Retirements of capital goods

Category: National accounts

Retirements represent the gross value of capital goods that are physically removed from the capital stock within a period of time. The removal may be determined by technical reasons (technical breakdown, destruction by accidents, fire etc.) or by economic reasons (emergence of new technologies, price changes of technical substitutes, closure of factories etc.). Both have to be considered in the estimation of the lifetime of capital goods. 
For a vintage of capital goods, retirements can be separated into "usual" and "special" retirements. The rate of usual losses during the maximum lifetime of a capital vintage can be estimated by statistical methods as shown in part 2. Special retirements (such as the destruction of capital goods by wars and disasters or by the sudden economic shrinkage of a branch) have to be calculated separately.