The method of estimating a country’s total capital stock, starting from the level of real investment in each past year. Investment is classified by type of capital goods, such as buildings, plant and machinery, and vehicles. An appropriate rate of write-off each year, based on the estimated lives of the various goods, is applied to each type of capital. The present capital stock is taken to be equal to the sum of past investments, written down in this way. The perpetual inventory method is contrasted with attempts to measure directly the actual levels of different types of capital goods in the economy.