Long‐Lived Working Animals As Capital Assets
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A recent review of ERS’s productivity accounts recommended that ERS treat dairy cows,
breeding beef cows and other long‐lived working animals as capital assets (Shumway, et. al 2014). BEA
was also given the same recommendation in the international guidelines for national accounts, System
of National Accounts 2008 (SNA 2008). In ERS’s farm accounts and BEA’s National Income and Product
Accounts (NIPA’s), long‐lived working animals are currently treated as an inventory asset. This paper
recalculates the farm accounts and NIPA’s when long‐lived working animals are re‐classified as a capital
asset. We show that this reclassification raises farm output and GDP for every year – but the increase is
larger for earlier years. As a result, real farm output growth and real GDP growth falls slightly when
long‐lived working animals are capitalized. Total factor productivity (TFP) growth falls slightly from
1.42% per year to 1.38% per year when year when long‐lived working animals are capitalized.