On the solution of the growth model with investment-specific technological change
Recent work by Greenwood et al. (1997, 2000) and Fisher (2003) has emphasized the importance of investment-specific technological change as a main driving force behind long-run growth and the business cycle. This article shows how the growth model with investment-specific technological change has a closed-form solution if capital fully depreciates. This solution furthers our understanding of the model and it constitutes a useful benchmark to check the accuracy of numerical procedures to solve dynamic macroeconomic models in cases with several state variables.
Volume (Year): 14 (2007)
Issue (Month): 8 ()
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- Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996.
"Long-Run Implications of Investment-Specific Technological Change,"
RCER Working Papers
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RCER Working Papers
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- Jonas D.M. Fisher, 1999. "The new view of growth and business cycles," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 35-56.
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"Technology shocks matter,"
Working Paper Series
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