Embodied technical change in a two-sector AK model

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Embodied technical change in a two-sector AK model

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Gabriel J Felbermayr (European University Institute)
Omar Licandro (European University Institute)

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Abstract

In this paper, we study a two-sector version of the AK model proposed by Rebelo (1991), where constant returns to capital are confined to the investment goods sector. We show that this setup, an endogenous growth extension to the model of Greenwood, Hercowitz, and Krusell (1997), reproduces important features of the U.S. NIPA data, namely the secular downward trend of the price of equipment investment relative to non- durable consumption and the increasing ratio of real equipment investment to real output. The main difference to the one-sector AK model lies in the existence of obsolescence costs, which decrease output growth if the elasticity of intertemporal substitution is larger than the saving rate.

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Paper provided by EconWPA in its series Macroeconomics with number 0210001.

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Date of creation: 01 Oct 2002
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Handle: RePEc:wpa:wuwpma:0210001

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Find related papers by JEL classification:
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2002-10-08 (All new papers)
NEP-DEV-2002-10-08 (Development)
NEP-DGE-2002-10-08 (Dynamic General Equilibrium)

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Raouf Boucekkine & Fernando del Río & Omar Licandro, 2003. "Embodied Technological Change, Learning-by-doing and the Productivity Slowdown," Scandinavian Journal of Economics, Blackwell Publishing, vol. 105(1), pages 87-98, 03. [Downloadable!] (restricted)
Other versions:
- Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Embodied technological change learning-by-doing and the productivity slowdown," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002028, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
- Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Embodied Technological Change, Learning-by-Doing and the Productivity Slowdown," Economics Working Papers ECO2002/12, European University Institute. [Downloadable!]
Hsieh, Chang-Tai, 2001. "Endogenous growth and obsolescence," Journal of Development Economics, Elsevier, vol. 66(1), pages 153-171, October. [Downloadable!] (restricted)
Omar LICANDRO & Javier RUIZ-CASTILLO & Jorge DURAN, 2001. "The Measurement of Growth under Embodied Technical Change," Economics Working Papers ECO2001/14, European University Institute. [Downloadable!]
Other versions:
- Omar Licandro & Jorge Durán & Javier Ruiz-Castillo, . "The Measurement of Growth under Embodied Technical Change," Working Papers 2001-09, FEDEA. [Downloadable!]
- Omar LICANDRO & Javier RUIZ-CASTILLO & Jorge DURAN, 2002. "The Measurement of Growth under Embodied Technical Change," Discussion Papers (REL - Recherches Economiques de Louvain) 2002011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
- Omar Licandro & Javier Ruiz-Castillo & Jorge Duran, 2002. "The Measurement of Growth under Embodied Technical Change," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 7-19. [Downloadable!]
Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June. [Downloadable!] (restricted)
Other versions:
- Sergio T. Rebelo, 1992. "Long Run Policy Analysis and Long Run Growth," NBER Working Papers 3325, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Ellen R. McGrattan, 1998. "A defense of AK growth models," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 13-27. [Downloadable!]
Altug, Sumru G. & Filiztekin, Alpay, 1999. "Estimates of the Returns to Scale for US Manufacturing," CEPR Discussion Papers 2121, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Altug, S. & Filiztekin, A., 1997. "Estimates of the Returns to Scale for US Manufacturing," Papers 1997/24, Koc University.
Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
Other versions:
- Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
- Greenwood, J. & Hercowitz, Z. & Krusell, P., 1995. "Long-Run Implications of Investment-Specific Technological Change," UWO Department of Economics Working Papers 9510, University of Western Ontario, Department of Economics.
Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May. [Downloadable!] (restricted)
Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2002. "Obsolescence and Modernization in the Growth Process," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002043, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
Other versions:
- BOUCEKKINE, Raouf & del RIO, Fernando & LICANDRO, Omar, 2002. "Obsolescence and modernizationn in the growth process," CORE Discussion Papers 2002067, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
- Raouf BOUCEKKINE & Fernando DEL RIO & Omar LICANDRO, 2001. "Obsolescence and Modernization in the Growth Process," Economics Working Papers ECO2001/18, European University Institute. [Downloadable!]
- Boucekkine, Raouf & del Rio, Fernando & Licandro, Omar, 2005. "Obsolescence and modernization in the growth process," Journal of Development Economics, Elsevier, vol. 77(1), pages 153-171, June. [Downloadable!] (restricted)
Restuccia, Diego & Urrutia, Carlos, 2001. "Relative prices and investment rates," Journal of Monetary Economics, Elsevier, vol. 47(1), pages 93-121, February. [Downloadable!] (restricted)

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