We take corporate income (profits) as a measure of the increase in the "economic power" of the equity holders of the firm. To be fully consistent with a Haig-Simons accrual definition of income, as we argued in our previous study, depreciablea ssets and inventoriess hould be carriedo n balances heetsa t theirc urrentm arketv urther,a ny reala ppreciation or depreciationo f these assetsr elativet o the generalp ricel evel shouldb e computeda s income. This policy had to be compromiseds omewhatd ue to the paucityo f data and the inadequacieso f the availablep rice indexes for specific capital goods. In practice, we recommend general-value depreciationa nd constant-dollarF IFO.
