Technological Progress, Obsolescence and Depreciation
We construct a vintage capital model à la Whelan (2002) with both exogenous embodied and disembodied technical progress, and variable utilization of each vintage. The lifetime of capital goods is endogenous and it relies on the associated maintenance costs. We study the properties of the balanced growth paths. First, we show that the lifetime of capital is an increasing (resp. decreasing) function of the rate of disembodied (resp.embodied) technical progress. Second, we show that both the use-related depreciation rate and the scrapping rate incease when embodied technical progress accelerates. However, the latter drops when disembodied technical progress accelerates while the former remains unaffected. A key feature of our model is that the age-related depreciation rate does depend on the obsolescence rate in sharp contrast to the neoclassical model.
|Date of creation:||01 Mar 2006|
|Contact details of provider:|| Postal: Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10473945
Web page: http://www.uclouvain.be/econ
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Boucekkine, Raouf & Germain, Marc & Licandro, Omar & Magnus, Alphonse, 1998.
"Creative Destruction, Investment Volatility, and the Average Age of Capital,"
Journal of Economic Growth,
Springer, vol. 3(4), pages 361-384, December.
- R. Boucekkine & M. Germain & O. Licandro & A. Magnus, "undated". "Creative destruction, investment volatility, and the average age of capital," Working Papers 97-08, FEDEA.
- BOUCEKKINE, Raouf & GERMAIN, Marc & LICANDRO, Omar & MAGNUS, Alphonse, "undated". "Creative destruction, investment volatility, and the average age of capital," CORE Discussion Papers RP 1376, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Epstein, L. & Denny, M., 1980. "Endogenous capital utilization in a short-run production model : Theory and an empiral application," Journal of Econometrics, Elsevier, vol. 12(2), pages 189-207, February.
- Ellen R. McGrattan & James A. Schmitz, 1999. "Maintenance and repair: too big to ignore," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 2-13.
- Feldstein, Martin S & Rothschild, Michael, 1974. "Towards an Economic Theory of Replacement Investment," Econometrica, Econometric Society, vol. 42(3), pages 393-423, May.
- Beaudry, Paul & van Wincoop, Eric, 1996. "The Intertemporal Elasticity of Substitution: An Exploration Using a US Panel of State Data," Economica, London School of Economics and Political Science, vol. 63(251), pages 495-512, August.
- Gylfason, Thorvaldur & Zoega, Gylfi, 2001. "Obsolescence," CEPR Discussion Papers 2833, C.E.P.R. Discussion Papers.
- Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-417, June.
- BOUCEKKINE, Raouf & RUIZ-TAMARIT, Ramon, "undated". "Capital maintenance and investment: complements or substitutes?," CORE Discussion Papers RP 1630, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- BOUCEKKINE, Raouf & RUIZ-TAMARIT Ramon, 2001. "Capital Maintenance and Investment : Complements or Substitutes ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Michael J. Geske & Valerie A. Ramey & Matthew D. Shapiro, 2007. "Why Do Computers Depreciate?," NBER Chapters,in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 121-150 National Bureau of Economic Research, Inc.
- Michael J. Geske & Valerie A. Ramey & Matthew D. Shapiro, 2004. "Why Do Computers Depreciate?," NBER Working Papers 10831, National Bureau of Economic Research, Inc.
- Karl Whelan, 2002. "Computers, Obsolescence, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 445-461, August.
- Karl Whelan, 2000. "Computers, obsolescence, and productivity," Finance and Economics Discussion Series 2000-06, Board of Governors of the Federal Reserve System (U.S.).
- Karl Whelan, 2002. "Computers, obsolescence, and productivity," Open Access publications 10197/204, School of Economics, University College Dublin.
- Karl Whelan, 2000. "Computers, obsolescence, and productivity," Open Access publications 10197/244, School of Economics, University College Dublin.
- 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 342-362, June.
- 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.
- 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).
- Patrick Musso, 2004. "Productivity Slowdown and Resurgence. The Role of Capital Obsolescence," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1215-1239.
- Nickell, Stephen, 1975. "A closer look at replacement investment," Journal of Economic Theory, Elsevier, vol. 10(1), pages 54-88, February.
- Bruce W Hamilton & Molly Macauley, 1996. "Competition and Car Longevity," Economics Working Paper Archive 361, The Johns Hopkins University,Department of Economics.