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Endogenous Growth, Capital Utilization and Depreciation

  • J. Aznar-Márquez
  • J. R. Ruiz-Tamarit
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    We study an extended version of the one-sector AK growth model introducing adjustment and maintenance costs. Agents are allowed to under-use the installed capital and to vary the depreciation rate. The model is analyzed using particular functional forms and is solved in closed-form. We find that adjustment and maintenance costs (e?- ciency) reduce (increases) investment, depreciation, capital utilization and the rate of growth; impatience reduces the rate of growth but increases depreciation and utilization, which are also negatively related to the rate of population growth; the rate of growth appears positively correlated with the depreciation rate and the rate of capital utilization.

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    File URL: http://documentos.fedea.net/pubs/dt/2004/dt-2004-21.pdf
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    Paper provided by FEDEA in its series Working Papers with number 2004-21.

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    Handle: RePEc:fda:fdaddt:2004-21
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    1. Sala-I-Martin, X. & Barro, R.J., 1991. "Public Finance in Models of Economic Growth," Papers 640, Yale - Economic Growth Center.
    2. Ruiz-Tamarit, J.R. & Ventura-Marco, M., 2011. "Solution to nonlinear MHDS arising from optimal growth problems," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 86-96, March.
    3. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    4. Omar Licandro & Luis A. Puch & J. Ramón Ruiz-Tamarit, 2001. "Optimal growth under endogenous depreciation, capital utilization and maintenance costs," Investigaciones Economicas, Fundación SEPI, vol. 25(3), pages 543-559, September.
    5. repec:oup:restud:v:59:y:1992:i:4:p:645-61 is not listed on IDEAS
    6. 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).
    7. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
    8. Craig Burnside & Martin Eichenbaum, 1994. "Factor Hoarding and the Propagation of Business Cycles Shocks," NBER Working Papers 4675, National Bureau of Economic Research, Inc.
    9. Motahar, Eshragh, 1992. "Endogenous capital utilization and the q theory of investment," Economics Letters, Elsevier, vol. 40(1), pages 71-75, September.
    10. Stephen L. Parente & Edward C. Prescott, 1993. "Changes in the wealth of nations," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-16.
    11. Abel, Andrew B & Blanchard, Olivier J, 1983. "An Intertemporal Model of Saving and Investment," Econometrica, Econometric Society, vol. 51(3), pages 675-92, May.
    12. 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.
    13. J. R. Ruiz-Tamarit & M. Ventura-Marco, . "Solution to Non-Linear MHDS arising from Optimal Growth Problems," Working Papers 2000-16, FEDEA.
    14. 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.
    15. repec:adr:anecst:y:2000:i:58:p:06 is not listed on IDEAS
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