Capital Consumption Allowance - CCA

AAA

DEFINITION of 'Capital Consumption Allowance - CCA'

The amount of money a country has to spend each year to maintain its present level of economic production. The capital consumption allowance (CCA) is calculated as a percentage of gross domestic product (GDP). The percentage of GDP that is not allocated to the CCA is called net domestic product and represents investment spending. CCA is also sometimes referred to as depreciation.



INVESTOPEDIA EXPLAINS 'Capital Consumption Allowance - CCA'

A CCA that is too high a percentage of GDP indicates poor economic growth. This situation occurred in the United States during the Great Recession of 2008. Before the recession, investment spending was $889 billion. By 2009, it had declined 94% to $54 billion from its peak in 2006. Meanwhile, the CCA in 2009 was $1.46 trillion, or about 92% of GDP.

RELATED TERMS
  1. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It ...
  2. Incremental Capital Output Ratio ...

    A metric that assesses the marginal amount of investment capital ...
  3. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  4. Gross National Product - GNP

    An economic statistic that includes GDP, plus any income earned ...
  5. Recession

    A significant decline in activity across the economy, lasting ...
  6. Depreciation

    1. A method of allocating the cost of a tangible asset over its ...
Related Articles
  1. Standard Of Living Vs. Quality Of Life
    Fundamental Analysis

    Standard Of Living Vs. Quality Of Life

  2. How To Use Gross National Product As ...
    Bonds & Fixed Income

    How To Use Gross National Product As ...

  3. What is GDP and why is it so important?
    Investing

    What is GDP and why is it so important?

  4. Where NOT To Invest in Latin America
    Economics

    Where NOT To Invest in Latin America

Hot Definitions
  1. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  2. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  3. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  4. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  5. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
  6. Macroeconomics

    The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena ...
Trading Center