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Vintage Capital and the Dynamics of the AK Model

Author

Listed:
  • Boucekkine, Raouf

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Licandro, Omar

    (FEDEA, Spain)

  • Puch, Luis A.

    (U. Complutense)

  • del Rio, Fernando

    (CEPREMAP)

Abstract

This paper analyzes the equilibrium dynamics of an AK-type endogenous growth model with vintage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionally influence the intercept of the balanced growth path. These features, which are in sharp contrast to those from the standard AK model, can contribute to explaining the short-run deviations observed between investment and growth rates time series. To characterize the convergence properties and the dynamics of the model we develop analytical and numerical methods that should be of interest for the general resolution of endogenous growth models with vintage capital.

Suggested Citation

  • Boucekkine, Raouf & Licandro, Omar & Puch, Luis A. & del Rio, Fernando, 1999. "Vintage Capital and the Dynamics of the AK Model," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2000009
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    endogenous growth; vintage capital; AK model; difference-differential equations;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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