IDEAS home Printed from https://ideas.repec.org/a/ids/ijcome/v1y2009i2p126-147.html
   My bibliography  Save this article

Optimal investment in immobile human capital in an economic and monetary union

Author

Listed:
  • Michal Konopczynski

Abstract

We analyse the optimal accumulation of physical and human capital in a small economy in monetary union. We derive the modified golden rule, which states that the optimal rates of investment in physical and human capital depend upon the natural rate of growth and the real interest rate. If they are equal, there exist infinitely many optimal pairs of investment rates. However, if they differ, the golden rule recommends one of two extreme solutions. Optimal investment rates are always linked together by a very simple linear equation (the line H). The economy should always stay on the line H, and move along this line, either up or down, in response to changes in exogenous parameters. These results are illustrated with numerical experiments, based on realistic values of exogenous parameters. Simulations suggest that current levels of investment in human capital in small European countries are way too low.

Suggested Citation

  • Michal Konopczynski, 2009. "Optimal investment in immobile human capital in an economic and monetary union," International Journal of Computational Economics and Econometrics, Inderscience Enterprises Ltd, vol. 1(2), pages 126-147.
  • Handle: RePEc:ids:ijcome:v:1:y:2009:i:2:p:126-147
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=29255
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
    2. Prokop, Jacek, 2005. "Monopolization through acquisition," MPRA Paper 43683, University Library of Munich, Germany, revised 2006.
    3. Hennessy, David A., 2000. "Cournot Oligopoly Conditions Under Which Any Horizontal Merger is Profitable," Staff General Research Papers Archive 1699, Iowa State University, Department of Economics.
    4. Kamien, Morton I & Zang, Israel, 1993. "Monopolization by Sequential Acquisition," Journal of Law, Economics, and Organization, Oxford University Press, vol. 9(2), pages 205-229, October.
    5. Mihkel M. Tombak, 2002. "Mergers to Monopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 513-546, September.
    6. Harris, Ellie G, 1994. "Why One Firm Is the Target and the Other the Bidder in Single-Bidder, Synergistic Takeovers," The Journal of Business, University of Chicago Press, vol. 67(2), pages 263-280, April.
    7. David Hennessy, 2000. "Cournot Oligopoly Conditions under which Any Horizontal Merger Is Profitable," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(3), pages 277-284, November.
    8. Morton I. Kamien & Israel Zang, 1990. "The Limits of Monopolization Through Acquisition," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 465-499.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijcome:v:1:y:2009:i:2:p:126-147. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Darren Simpson). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID==311 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.