Julio Huato wrote:
Say, the labor force will grow at 4% per year in the future and per-capita income at 1%. Then, the next best alternative is expanding global net income at a rate of 5% per year. This growth rate is assumed constant (since there's no risk, no volatility). So that's the global discount rate we should use to price our annuity. Thus, the discounted present value of global capital is:
K = 30 trillion USD/0.05 = 600 trillion USD
Another approach. According to the BEA, the value of fixed reproducible tangible wealth (including consumer durables) in the U.S. was $32.8 trillion in 2002. (Note that the rate of return on those assets implied by GDP is a lot higher than Julio's estimate - around 30%.) That year, according to World Bank stats, the U.S. had 32% of world GDP. So, scaling up based on that income share, we can estimate that the global capital stock is worth $102.1 trillion - or roughly $16,000 per capita.
Doug
