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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 vingage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionally 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 develop 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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  2. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  3. Boucekkine, Raouf & Germain, Marc & Licandro, Omar & Magnus, Alphonse, 2001. "Numerical solution by iterative methods of a class of vintage capital models," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 655-669, May.
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