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The Embodiment Controversy: on the Policy Implications of Vintage Capital models

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  • Samaniego, Roberto

Abstract

We explore the long run impact of policy on the level of economic activity through changes in the vintage distribution of capital, in a model where different vintages coexist in production. Because firms can choose the vintage of capital in which they invest, investment subsidies do not in general affect the vintage structure of capital. In contrast, vintage-specific taxes or subsidies that target the newest vintages of capital can significantly affect output and welfare in the long run, mainly downwards.

Suggested Citation

  • Samaniego, Roberto, 2016. "The Embodiment Controversy: on the Policy Implications of Vintage Capital models," MPRA Paper 73348, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:73348
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    More about this item

    Keywords

    Embodiment controversy; vintage capital; capital taxation; investment subsidies.;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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