Idle Capital and Long-Run Productivity
In the present paper the joint determination of long-run income per worker and capital utilization is studied. It is shown that comparatively low (optimal) rates of capital utilization may arise in poor economies in response to weak underlying structural characteristics. Moreover, the quantitative implications of variable capital utilization are also explored. It is demonstrated that adding endogenous capital utilization to the Solow model implies a rate of convergence in line with empirical estimates, and, that controlling for capital utilization leads to interesting modifications of the results stemming from oft-cited exercises in cross-country growth and levels accounting.
|Date of creation:||Jun 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark|
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:kud:epruwp:02-06. 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: (Thomas Hoffmann)
If references are entirely missing, you can add them using this form.