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Vintage capital and the dynamics of the AK model

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  • Boucekkine, Raouf
  • Licandro, Omar
  • Puch, Luis A.
  • del Rio, Fernando

Abstract

This paper analyzes the equilibrium dynamics of an AK-type endogenous growth model with vintage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionnally influence the intercept of the balanced growth path. These features, which are in sharp contrast to those from the standard AK model, can contribute to explaining the short-run deviations observed between investment and growth rates time series to characterize the convergence properties and the dynamics of the model we develope analytical and numerical methods that should be of interest for the general resolution of endogenous growth models with vintage capital.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 120 (2005)
Issue (Month): 1 (January)
Pages: 39-72

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Handle: RePEc:eee:jetheo:v:120:y:2005:i:1:p:39-72

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Web page: http://www.elsevier.com/locate/inca/622869

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  1. Boucekkine, Raouf, 1997. "Replacement echoes in the vintage capital growth model. J. Econ. Theory," Open Access publications from Université catholique de Louvain info:hdl:2078.1/46658, Université catholique de Louvain.
  2. Parente Stephen L., 1994. "Technology Adoption, Learning-by-Doing, and Economic Growth," Journal of Economic Theory, Elsevier, vol. 63(2), pages 346-369, August.
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  4. Askenazy, P. & Le Van, C., 1997. "A Model of Optimal Growth Strategy," DELTA Working Papers 97-27, DELTA (Ecole normale supérieure).
  5. Raouf, BOUCEKKINE & David, DE LA CROIX & Omar, LICANDRO, 2006. "Vintage Capital," Discussion Papers (ECON - Département des Sciences Economiques) 2006014, Université catholique de Louvain, Département des Sciences Economiques.
  6. Raouf Boucekkine & Marc Germain & Omar Licandro & Alphonse Magnus, . "Numerical solution by iterative methods of a class on vintage capital models," Working Papers 97-26, FEDEA.
  7. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
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  11. Boucekkine, Raouf, 2001. "Numerical solution by iterative methods of a class of vintage capital models. J. Econ. Dyn. Control," Open Access publications from Université catholique de Louvain info:hdl:2078.1/43077, Université catholique de Louvain.
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  15. Jess Benhabib & Aldo Rustichini, 1990. "Vintage Capital, Investment and Growth," Discussion Papers 886, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  16. Whelan, Karl, 2002. "Computers, obsolescence, and productivity," Open Access publications from University College Dublin urn:hdl:10197/204, University College Dublin.
  17. Ellen R. McGrattan, 1998. "A defense of AK growth models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 13-27.
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