Cost of capital to Irish industry - revised estimates

Abstract

Cost of capital indices, based on those of Geary, Walsh and Copeland (1975), are revised and updated to 1975. The revisions involve the use of different series for the price of new capital goods and the borrowing rate of interest to firms, a more extensive discussion of the cost of capital in cases where the change in the price of capital goods is included, a different treatment of depreciation, and some allowance is made for the effect of IDA grants. An index of the cost of labour inclusive of employers' social welfare contributions is also presented and it is compared to the different measures of the cost of capital. It is concluded that government policies have raised the cost of labour relative to capital.