On the solution of the growth model with investment-specific technological change
AbstractRecent work by Greenwood, Hercowitz, and Krusell (1997 and 2000) and Fisher (2003) has emphasized the importance of investment-specific technological change as a main driving force behind long-run growth and the business cycle. This paper shows how the growth model with investment-specific technological change has a closed-form solution if capital fully depreciates. This solution furthers our understanding of the model, and it constitutes a useful benchmark to check the accuracy of numerical procedures to solve dynamic macroeconomic models in cases with several state variables.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2004-39.
Date of creation: 2004
Date of revision:
Other versions of this item:
- Jesus Fernandez-Villaverde & Juan F. Rubio-Ramirez, 2007. "On the solution of the growth model with investment-specific technological change," Applied Economics Letters, Taylor and Francis Journals, vol. 14(8), pages 549-553.
- NEP-ALL-2005-05-23 (All new papers)
- NEP-DEV-2005-05-23 (Development)
- NEP-DGE-2005-05-23 (Dynamic General Equilibrium)
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- Jonas D. M. Fisher, 2002.
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Working Paper Series
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449, University of Rochester - Center for Economic Research (RCER).
- Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 2000. "The role of investment-specific technological change in the business cycle," European Economic Review, Elsevier, vol. 44(1), pages 91-115, January.
- Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000.
"Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,"
Econometric Society, vol. 68(5), pages 1029-1054, September.
- Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
- Jonas D.M. Fisher, 1999. "The new view of growth and business cycles," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 35-56.
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