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Time-to build, growth and welfare

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Author Info
Esther Fernández (Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid)
Jesús Ruiz (Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid)

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Abstract

In an AK endogenous growth setup with a time-to-build investment technology, the steadystate growth rate and the level of welfare are shown not to be independent ot the time distribution of the financing of an investment project. We emphasize that welfare effects in the AK model are of opposite sign to those arising in an exogenous growth model when both theorical economies share the same long-run growth rate and the same steady state real interest rate. En una modelo AK de crecimiento endógeno con tecnología de inversión time-to-build, tanto la tasa de crecimiento de estado estacionario como el nivel de bienestar dependen de la distribución temporal de financiación de un proyecto de inversión. Además, se muestra que los efectos que sobre el bienestar provocan los cambios en la citada distribución temporal en el modelo AK tienen el signo contrario a los efectos que surgen en el modelo de crecimiento exógeno, cuando las economías modelizadas tienen la misma tasa de crecimiento de largo plazo y el mismo tipo de interés real de estado estacionario.

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File URL: http://eprints.ucm.es/6791/
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Publisher Info
Paper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales in its series Documentos del Instituto Complutense de Análisis Económico with number 0107.

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Date of creation: 2001
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Handle: RePEc:ucm:doicae:0107

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  1. Rouwenhorst, K. Geert, 1991. "Time to build and aggregate fluctuations : A reconsideration," Journal of Monetary Economics, Elsevier, vol. 27(2), pages 241-254, April. [Downloadable!] (restricted)
  2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November. [Downloadable!] (restricted)
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  3. Brock, William A. & Mirman, Leonard J., 1972. "Optimal economic growth and uncertainty: The discounted case," Journal of Economic Theory, Elsevier, vol. 4(3), pages 479-513, June. [Downloadable!] (restricted)
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This page was last updated on 2009-11-17.


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