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Transition Dynamics in Vintage Capital Models: Explaining the Postwar Catch-Up of Germany and Japan

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  • Simon Gilchrist
  • John C. Williams

Abstract

We consider a neoclassical interpretation of Germany and Japan's rapid postwar growth that relies on a catch-up mechanism through capital accumulation where technology is embodied in new capital goods. Using a putty-clay model of production and investment, we are able to capture many of the key empirical properties of Germany and Japan's postwar transitions, including persistently high but declining rates of labor and total-factor productivity growth, a U-shaped response of the capital-output ratio, rising rates of investment and employment, and moderate rates of return to capital.

Suggested Citation

  • Simon Gilchrist & John C. Williams, 2004. "Transition Dynamics in Vintage Capital Models: Explaining the Postwar Catch-Up of Germany and Japan," NBER Working Papers 10732, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:10732
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    Cited by:

    1. Hippolyte d'Albis & Jean-Pierre Drugeon, 2020. "On Investment and Cycles in Explicitely Solved Vintage Capital Models," PSE Working Papers halshs-02570648, HAL.
    2. Taiji Hagiwara & Yoichi Matsubayashi, 2014. "Capital Accumulation, Vintage and Productivity: The Japanese Experience," Discussion Papers 1418, Graduate School of Economics, Kobe University.
    3. Christopher Blattman, 2009. "Civil War: A Review of Fifty Years of Research," Working Papers id:2231, eSocialSciences.
    4. Miguel, Edward & Roland, Gérard, 2011. "The long-run impact of bombing Vietnam," Journal of Development Economics, Elsevier, vol. 96(1), pages 1-15, September.
    5. Chris Papageorgiou, 2002. "Human Capital and Convergence in a Non-Scale R&D Growth Model," Departmental Working Papers 2002-10, Department of Economics, Louisiana State University.
    6. Gourio, François, 2011. "Putty-clay technology and stock market volatility," Journal of Monetary Economics, Elsevier, vol. 58(2), pages 117-131, March.
    7. Otsu Keisuke, 2009. "A Neoclassical Analysis of the Postwar Japanese Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-30, May.
    8. Jean-Pierre Benoit & Juan Dubra, 2004. "Why Do Good Cops Defend Bad Cops?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(3), pages 787-809, August.
    9. Alvarez-Cuadrado, Francisco, 2008. "Growth outside the stable path: Lessons from the European reconstruction," European Economic Review, Elsevier, vol. 52(3), pages 568-588, April.
    10. Comin, D. & Hobijn, B., 2004. "Cross-country technology adoption: making the theories face the facts," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 39-83, January.
    11. Christopher Blattman & Edward Miguel, 2010. "Civil War," Journal of Economic Literature, American Economic Association, vol. 48(1), pages 3-57, March.
    12. Chatterjee, Santanu, 2005. "Capital utilization, economic growth and convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 29(12), pages 2093-2124, December.
    13. Roc Armenter & Amartya Lahiri, 2006. "Endogenous Productivity and Development Accounting," 2006 Meeting Papers 268, Society for Economic Dynamics.
    14. Simon Gilchrist & John C. Williams, 2005. "Investment, Capacity, and Uncertainty: A Putty-Clay Approach," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(1), pages 1-27, January.
    15. Diego Comin & Bart Hobijn, 2011. "Technology Diffusion and Postwar Growth," NBER Chapters, in: NBER Macroeconomics Annual 2010, volume 25, pages 209-246, National Bureau of Economic Research, Inc.
    16. Chang Yongsung & Hornstein Andreas, 2015. "Transition dynamics in the neoclassical growth model: the case of South Korea," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 649-676, July.
    17. Ippei Fujiwara & Keisuke Otsu & Masashi Saito, 2008. "The Global Impact of Chinese Growth," IMES Discussion Paper Series 08-E-22, Institute for Monetary and Economic Studies, Bank of Japan.
    18. Rappaport, Jordan, 2006. "A bottleneck capital model of development," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 2113-2129, November.
    19. Selahattin Imrohoroglu & Ayse Imrohoroglu & Kaiji Chen, 2006. "The Japanese Saving Rate," American Economic Review, American Economic Association, vol. 96(5), pages 1850-1858, December.
    20. Papageorgiou, Chris & Perez-Sebastian, Fidel, 2006. "Dynamics in a non-scale R&D growth model with human capital: Explaining the Japanese and South Korean development experiences," Journal of Economic Dynamics and Control, Elsevier, vol. 30(6), pages 901-930, June.
    21. Mićo Mrkaić & Rado Pezdir, 2007. "Transition And Political Markets: Post‐War German Versus Post‐Socialist Slovenian Reconstruction," Economic Affairs, Wiley Blackwell, vol. 27(4), pages 58-64, December.
    22. Tim Mennel & Teresa Romano & Sara Scatasta, 2013. "Comparing Feed-In Tariffs and Renewable Obligation Certificates - The Case of Repowering Wind Farms," IEFE Working Papers 57, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    23. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    24. Gollin, Douglas, 2008. "Nobody's business but my own: Self-employment and small enterprise in economic development," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 219-233, March.
    25. Gorodnichenko, Yuriy & Kudlyak, Marianna & Sahin, Aysegül, 2022. "The Effect of the War on Human Capital in Ukraine and the Path for Rebuilding," IZA Policy Papers 185, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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