INVESTMENT EFFECTS OF ENDOGENOUS AND EXOGENOUS DEPRECIATION: IMPROVED PASTURES IN URUGUAY

The depreciation rate for capital assets may have endogenous and exogenous components. Change in the exogenous component depends on technological change and/or environmental factors, shifts the production function, and independently affects profitability and investment. Change in the endogenous component does not. These hypotheses are tested using data on Uruguayan grass-legume pastures.