Idle Capital and Long-Run Productivity
AbstractIn the present paper the joint determination of long-run income per worker and capital utilization is studied. It is shown that comparatively low (optimal) rates of capital utilization may arise in poor economies in response to weak underlying structural characteristics. Moreover, the quantitative implications of variable capital utilization are also explored. It is demonstrated that adding endogenous capital utilization to the Solow model implies a rate of convergence in line with empirical estimates, and, that controlling for capital utilization leads to interesting modifications of the results stemming from oft-cited exercises in cross-country growth and levels accounting.
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Bibliographic InfoPaper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 02-06.
Date of creation: Jun 2002
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Other versions of this item:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-08 (All new papers)
- NEP-DEV-2003-05-08 (Development)
- NEP-DGE-2003-05-08 (Dynamic General Equilibrium)
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EPRU Working Paper Series
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- Barañano Mentxaka, Ilaski & Romero-Avila, Diego, 2013. "Long-Term Growth and Persistence with Endogenous Depreciation: Theory and Evidence," IKERLANAK Ikerlanak;2013-68, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
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