ABS data set construction update

Today I met up with Gary to commence our collective construction of the ABS data set from catalogs 5204.0 and 5206.0. The panel data set is going to be constructed along:

• Time (in years)
  
• Industry
• Input variables such as capital stock, capital service, capital expenditure

Initially we were faced with a few problems in trying to work out what items we were going to include since numerous studies have elaborated on the various production inputs in different levels of detail. We have decided on including the following variables:

• Capital stock - for IT and Non-IT
• Capital service - for IT and Non-IT
• Labour productivity
• Labour hours
• Cost of employment
• Gross Value Added
• Hardware, Software (IT) expenditure and non-IT expenditure
  

We also faced problems in trying to match up these required variables with the data that the ABS has provided in these two catalogs. The fundamental difference between the two catalogs is that 5206.0 deals with data that is reported quaterly whilst 5204.0 deals with data that is reported in annually. Since the panel data set is going to need annual data we will be predominantly be using the items retrieved from 5204.0. Additionally we were slightly confused with what items in 5204.0 match up to our items especially regarding capital. However after consulting with Dr. Poon today this has been clarified. Additionally Dr. Poon has provided us with a data set up to the year 2002. This data set will not only provide us further guidance in constructing the data set but also serve as a means to use as a "test" data set, which I can use to test my AES function which i will write in R in the coming weeks.

Dr. Poon also provided us with further insight into our thesis in our brief consultation. Dr.Poon brought to my attention that I might need to obtain data on rental prices and include this in my model and calculation of AES. However I will first need to review my literature to see if previous work has included this. If they have not then the partial derivatives in the Hessian matrix (see post Test for Substitution Elasticity) will be:

• the co-efficients from the regression * [value add (output) / input of the variable]

I will continue to work on panel data set construction with my fellow peers and hope to have it almost complete by the end of the week.