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Vintage capital theory: Three breakthroughs

  • Raouf Boucekkine

    ()

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales - Université Paul Cézanne - Aix-Marseille 3 - Université de la Méditerranée - Aix-Marseille 2 - CNRS - Centre National de la Recherche Scientifique)

  • David De La Croix

    ()

    (CORE - Department of Economics - UCL - Université Catholique de Louvain)

  • Omar Licandro

    ()

    (IAE - Institut d'Anàlisi Econòmica - UAB - Universitat Autònoma de Barcelona [Barcelona])

Vintage capital growth models have been at the heart of growth theory in the 60s. This research line collapsed in the late 60s with the so-called embodiment controversy and the technical sophisitication of the vintage models. This paper analyzes the astonishing revival of this literature in the 90s. In particular, it outlines three methodological breakthroughs explaining this resurgence: a growth accounting revolution, taking advantage of the availability of new time series, an optimal control revolution allowing to safely study vintage capital optimal growth models, and a vintage human capital revolution, along with the rise of economic demography, accounting for the vintage structure of human capital similarly to physical capital age structuring. The related literature is surveyed.

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Date of creation: 08 Jun 2011
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Handle: RePEc:hal:wpaper:halshs-00599074
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