Multiple Equilibria and Indeterminacy in an Optimal Growth Model with Endogenous Capital Depreciation
This paper extends an otherwise standard one-sector neoclassical growth model by postulating that the depreciation rate of physical capital depends on the agent's efforts on maintenance and repairs. Specifically, we introduce endogenous depreciation into the standard optimal growth model via two different mechanisms and examine the steady state and the dynamics of the model economy qualitatively and quantitatively. We find that with plausibel parameter values, multiple equilibria and indeterminacy can arise in simply modified optimal growth model.
|Date of creation:||30 May 2010|
|Contact details of provider:|| Web page: http://cema.cufe.edu.cn/|
More information through EDIRC
References listed on IDEAS
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.:
- Kiminori Matsuyama, 1991.
"Increasing Returns, Industrialization, and Indeterminacy of Equilibrium,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(2), pages 617-650.
- Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Benhabib Jess & Farmer Roger E. A., 1994.
"Indeterminacy and Increasing Returns,"
Journal of Economic Theory,
Elsevier, vol. 63(1), pages 19-41, June.
- Benhabib, J. & Farmer, R.E.A, 1991. "Indeterminacy and Increasing Returns," Papers 165, Cambridge - Risk, Information & Quantity Signals.
- Benhabib, Jess & Farmer, Roger E.A., 1991. "Indeterminacy and Increasing Returns," Working Papers 91-59, C.V. Starr Center for Applied Economics, New York University.
- Jess Benhabib & Roger E.A. Farmer, 1992. "Indeterminacy and Increasing Returns," UCLA Economics Working Papers 646, UCLA Department of Economics.
- Engelbert Dockner & Gustav Feichtinger, 1991. "On the optimality of limit cycles in dynamic economic systems," Journal of Economics, Springer, vol. 53(1), pages 31-50, February.
- Mukoyama, Toshihiko, 2008. "Endogenous depreciation, mismeasurement of aggregate capital, and the productivity slowdown," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 513-522, March.
- Spear, Stephen E., 1991. "Growth, externalities, and sunspots," Journal of Economic Theory, Elsevier, vol. 54(1), pages 215-223, June.
- Howitt, P. & Mcfee, R.P., 1990.
UWO Department of Economics Working Papers
9005, University of Western Ontario, Department of Economics.
- Leonardo Auernheimer, 1986. "Variable Depreciation and Some of Its Implications," Canadian Journal of Economics, Canadian Economics Association, vol. 19(1), pages 99-113, February.
- Seiya Fujisaki & Kazuo Mino, 2010.
"Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation,"
AccessEcon, vol. 30(1), pages 808-816.
- Fujisaki, Seiya & Mino, Kazuo, 2009. "Long-Run Impacts of Inflation Tax with Endogenous Capital Depreciation," MPRA Paper 16657, University Library of Munich, Germany.
- George Evans & Seppo Honkapohja & Paul Romer, 1996.
NBER Working Papers
5659, National Bureau of Economic Research, Inc.
- Boldrin, Michele & Montrucchio, Luigi, 1986. "On the indeterminacy of capital accumulation paths," Journal of Economic Theory, Elsevier, vol. 40(1), pages 26-39, October.
- Gylfason, Thorvaldur & Zoega, Gylfi, 2007. "A golden rule of depreciation," Economics Letters, Elsevier, vol. 96(3), pages 357-362, September.
- William J. Baumol, 1971. "Optimal Depreciation Policy: Pricing the Products of Durable Assets," Bell Journal of Economics, The RAND Corporation, vol. 2(2), pages 638-656, Autumn.
- Dangl, Thomas & Wirl, Franz, 2004. "Investment under uncertainty: calculating the value function when the Bellman equation cannot be solved analytically," Journal of Economic Dynamics and Control, Elsevier, vol. 28(7), pages 1437-1460, April.
- Bitros, George C, 1976. "A Statistical Theory of Expenditures in Capital Maintenance and Repair," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 917-936, October.
- Rioja, Felix K., 2003. "Filling potholes: macroeconomic effects of maintenance versus new investments in public infrastructure," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2281-2304, September.
When requesting a correction, please mention this item's handle: RePEc:cuf:wpaper:392. 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: (Qiang Gao)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.