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A bottleneck capital model of development

  • Rappaport, Jordan

A convex marginal adjustment cost allows the neoclassical growth model to match observed transition paths for output growth, savings, investment, the real interest rate, and the shadow value of installed capital. Such an adjustment cost need apply only to one of two complementary capital inputs with minimal factor income share. The interaction of complementary capital inputs blurs the distinction between capital accumulation and productivity growth.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 53 (2006)
Issue (Month): 8 (November)
Pages: 2113-2129

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Handle: RePEc:eee:moneco:v:53:y:2006:i:8:p:2113-2129
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