The dynamics of a simple relative adjustment-cost framework
AbstractThis paper considers a capital accumulation model with the specific feature that adjustment costs depend on investment relative to the size of the capital stock. This framework has, beyond its plausible yet neglected setting, a number of interesting consequences. In particular, the possibility of multiple equilibria, of an unstable steady state and thus of a (`history dependent') threshold associated with concavity is surprising given a voluminous literature on multiple, history-dependent equilibria emphasizing non-concavities (or convexities). Copyright Verein fÃ¼ Socialpolitik and Blackwell Publishers Ltd 2001.
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Bibliographic InfoPaper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-86779.
Date of creation: 2001
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Publication status: Published in German Economic Review (2001) v.2, p.255-268
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Other versions of this item:
- Gustav Feichtinger & Peter M. Kort & Richard F. Hartl & Franz Wirl, 2001. "The Dynamics of a Simple Relative Adjustment Cost Framework," German Economic Review, Verein für Socialpolitik, vol. 2(3), pages 255-268, 08.
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