Complementarities and Costly Investment in a One-Sector Growth Model
AbstractThe presence of complementarities generally makes a growth model nonlinear, hence delivering multiple equilibria. Introducing internal investment costs in the R&D-based growth literature, we develop a growth model which combines the assumptions of complementarities between capital goods in the production function and of internal costly investment in capital. We find that with such combination of complementarities and costly investment, the growth model delivers a single equilibrium.
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Bibliographic InfoPaper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 8/2007.
Date of creation: 2007
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-14 (All new papers)
- NEP-DGE-2007-04-14 (Dynamic General Equilibrium)
- NEP-MAC-2007-04-14 (Macroeconomics)
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