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Endogenous Growth, Capital Utilization and Depreciation

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  • J. AZNAR-MARQUEZ

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Universitat de Valencia (Spain))

  • J.R. RUIZ-TAMARIT

    (Universitat de Valencia (Spain))

Abstract

We study the one sector model of growth when a linear production technology is combined with adjustment costs and a technology for capital maintenance. Agents are allowed to under-use the installed capital and to vary the depreciation rate. This economy decides endogenously how much resources devotes to the accumulation of new capital and how much to maintenance and repair activities. We find as striking results that the long-run depreciation and capital utilization rates are positively related to the population growth rate, and that both depend negatively on the initial conditions. The long-run growth rate appears positively correlated with the depreciation rate.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2001037.

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Length: 30
Date of creation: 01 Dec 2001
Date of revision:
Handle: RePEc:ctl:louvir:2001037

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Keywords: Maintenance; Depreciation; Capital Utilization; Endogenous Growth;

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References

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  1. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  2. Motahar, Eshragh, 1992. "Endogenous capital utilization and the q theory of investment," Economics Letters, Elsevier, vol. 40(1), pages 71-75, September.
  3. Omar Licandro & Luis A. Puch & J. Ramón Ruiz Tamaritz, 2001. "Optimal Growth under Endogeneous Depreciation, Capital Utilization and Maintenance Costs," Documentos del Instituto Complutense de Análisis Económico 0101, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
  4. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
  5. Barro, Robert J. & Sala-i-Martin, Xavier, 1992. "Public Finance in Models of Economic Growth," CEPR Discussion Papers 630, C.E.P.R. Discussion Papers.
  6. J. R. Ruiz-Tamarit & M. Ventura-Marco, . "Solution to Non-Linear MHDS arising from Optimal Growth Problems," Working Papers 2000-16, FEDEA.
  7. Peeters, Marga & Ghijsen, Paul, 1995. "Capital, Labour, Materials and Additional R&D Investment in Japan. The Issue of (Double-) Counting," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1995009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  8. BOUCEKKINE, Raouf & RUIZ-TAMARIT Ramon, 2001. "Capital Maintenance and Investment : Complements or Substitutes ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  9. Ellen R. McGrattan & James A. Schmitz, Jr., 1999. "Maintenance and repair: too big to ignore," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 2-13.
  10. Beatriz Rumbos & Leonardo Auernheimer, 2001. "Endogenous capital utilization in a neoclassical growth model," Atlantic Economic Journal, International Atlantic Economic Society, vol. 29(2), pages 121-134, June.
  11. Burnside, Craig & Eichenbaum, Martin, 1996. "Factor-Hoarding and the Propagation of Business-Cycle Shocks," American Economic Review, American Economic Association, vol. 86(5), pages 1154-74, December.
  12. Abel, Andrew B & Blanchard, Olivier J, 1983. "An Intertemporal Model of Saving and Investment," Econometrica, Econometric Society, vol. 51(3), pages 675-92, May.
  13. Sergio Rebelo, 1999. "Long Run Policy Analysis and Long Run Growth," Levine's Working Paper Archive 2114, David K. Levine.
  14. Epstein, L. & Denny, M., 1980. "Endogenous capital utilization in a short-run production model : Theory and an empiral application," Journal of Econometrics, Elsevier, vol. 12(2), pages 189-207, February.
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Cited by:
  1. J. R. Ruiz-Tamarit & M. Ventura-Marco, . "Solution to Non-Linear MHDS arising from Optimal Growth Problems," Working Papers 2000-16, FEDEA.
  2. Corinne Mette, . "Wellbeing and dependency among European elderly: The role of social integration," Working Papers 2005-12, FEDEA.
  3. Eleni Angelopoulou & Sarantis Kalyvitis, 2012. "Estimating the Euler Equation for Aggregate Investment with Endogenous Capital Depreciation," Southern Economic Journal, Southern Economic Association, vol. 78(3), pages 1057-1078, January.
  4. Simon Sosvilla-Rivero & Pedro N. Rodríguez, . "Linkages in international stock markets: Evidence from a classification procedure," Working Papers 2004-23, FEDEA.
  5. Namkee Ahn & Juan Ramón García & José A. Herce, . "Demographic Uncertainty and Health Care Expenditure in Spain," Working Papers 2005-07, FEDEA.
  6. Fujisaki, Seiya & Mino, Kazuo, 2009. "Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation," MPRA Paper 16657, University Library of Munich, Germany.
  7. Ana Carolina Ortega Masagué, . "La situación laboral de los inmigrantes en España: Un análisis descriptivo," Working Papers 2005-08, FEDEA.

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