THE MARGINAL PRODUCTS OF RESIDENTIAL AND NON-RESIDENTIAL CAPITALTHROUGH 2009

Estimates of the marginal product of capital can help forecast economic growth, test competing businesscycle theories, and perform cost-benefit analysis. This paper presents annual and quarterly estimatesof the marginal product of capital in the U.S. separately for the residential and non-residential sectors.The two sectors had positively correlated marginal products until the 2000s, when the residential marginalproduct fell during the housing boom, and rose during the housing bust. By the end of 2009, the residentialMPK was back to the level of the 1990s. Although off its lows, the non-residential MPK is still belowits historical average....