Nowadays, different methods are used to calculate the capital stock in Iran. For example, the Central Bank uses permanent inventory method (PIM) to calculate the capital stock, however the researchers have used the production function method or the method of the ratio of capital to production in different periods. The present study aims at estimating the capital stock in Iran’s economic sectors. By comparing the results of permanent inventory method (PIM) and production function method, it is observed that the estimations by production function method are more suitable due to the data limitations. The same method was applied for the U.S. regarding data limitations and estimations were compared with the U.S capital stock; and once again the production function method was selected. It is found that the depreciation rates in agriculture, industry and mining, building, services, oil and gas, and water and electricity are 5.8, 4.9, 7.8, 3.5, 6.3, and 4.1 per cent, respectively. In order to make the depreciation rate more reliable, these rates were compared with the similar researches in Iran and a close relationship was found among them  

Keywords: Capital Stock, Permanent inventory method (PIM), Production function, Potential added value, Kalman filter

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