TY - JOUR AU - Doms, Mark E AU - Dunn, Wendy E AU - Oliner, Stephen D AU - Sichel, Daniel E TI - How Fast Do Personal Computers Depreciate? Concepts and New Estimates JF - National Bureau of Economic Research Working Paper Series VL - No. 10521 PY - 2004 Y2 - May 2004 DO - 10.3386/w10521 UR - http://www.nber.org/papers/w10521 L1 - http://www.nber.org/papers/w10521.pdf N1 - Author contact info: Mark E. Doms Department of Commerce Economics and Statistics Administration E-Mail: mark.doms@gmail.com Wendy Dunn Federal Reserve Board 20th & Constitution Ave., NW Washington, DC 20551 E-Mail: wendy.e.dunn@frb.gov Stephen D. Oliner American Enterprise Institute 1150 17th St., NW Washington, DC 20036 E-Mail: stephen.oliner@aei.org Daniel E. Sichel Department of Economics Wellesley College 106 Central Street Wellesley, MA 02481 Tel: 781/283-2988 E-Mail: dsichel@wellesley.edu M1 - published as Mark E. Doms, Wendy F. Dunn, Stephen D. Oliner, Daniel E. Sichel. "How Fast do Personal Computers Depreciate? Concepts and New Estimates," in James Poterba, editor, "Tax Policy and the Economy, Volume 18" MIT Press (2004) AB - This paper provides new estimates of depreciation rates for personal computers using an extensive database of prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect, where the latter effect is driven by the steep ongoing drop in the constant-quality prices of newly-introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPAs) and were incorporated into the December 2003 comprehensive NIPA revision. Regarding tax policy, our estimates suggest that the current tax depreciation schedule for PCs closely tracks the actual loss of value in a zero-inflation environment. However, because the tax code is not indexed for inflation, the tax allowances would be too small in present value for inflation rates above the very low level now prevailing. ER -