The Dynamics of a Simple Relative Adjustment Cost Framework
AbstractThis paper considers a capital accumulation model with the specific feature that adjustment costs depend on investment relative to the size of the capital stock. This framework has, beyond its plausible yet neglected setting, a number of interesting consequences. In particular, the possibility of multiple equilibria, of an unstable steady state and thus of a (`history dependent') threshold associated with concavity is surprising given a voluminous literature on multiple, history-dependent equilibria emphasizing non-concavities (or convexities). Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2001.
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Bibliographic InfoArticle provided by Verein für Socialpolitik in its journal German Economic Review.
Volume (Year): 2 (2001)
Issue (Month): 3 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1465-6485
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Other versions of this item:
- Wirl, F. & Hartl, R.F. & Feichtinger, G. & Kort, P.M., 2001. "The dynamics of a simple relative adjustment-cost framework," Open Access publications from Tilburg University urn:nbn:nl:ui:12-86779, Tilburg University.
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