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Solow vs. Solow: Machine Prices and Development

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  • Boyan Jovanovic
  • Rafael Rob

Abstract

Machines are more expensive in poor countries, and the relation is pronounced. It is hard for a Solow (1956) type of model to explain the relation between machine prices and GDP given that in most countries equipment investment is under 10% of GDP. A stronger relation emerges in a Solow (1959) type of vintage model in which technology is embodied in machines.

Suggested Citation

  • Boyan Jovanovic & Rafael Rob, 1997. "Solow vs. Solow: Machine Prices and Development," NBER Working Papers 5871, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5871
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    References listed on IDEAS

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    Cited by:

    1. Plutarchos Sakellaris & Daniel J. Wilson, 2004. "Quantifying Embodied Technological Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 1-26, January.
    2. Samuel de Abreu Pess & Rafael Rob, 2002. "Vintage Capital, Distortions and Development," Penn CARESS Working Papers ee2dae6cb07096d09f83c7bca, Penn Economics Department.
    3. Ortigueira, Salvador, 2003. "Equipment prices, human capital and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 28(2), pages 307-329, November.
    4. Herrendorf, Berthold & Teixeira, Arilton, 2003. "Monopoly Rights can Reduce Income Big Time," CEPR Discussion Papers 3854, C.E.P.R. Discussion Papers.
    5. Hendricks, Lutz, 2000. "Equipment investment and growth in developing countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 335-364, April.
    6. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.
    7. Fabbri, Giorgio & Gozzi, Fausto, 2006. "Vintage Capital in the AK growth model: a Dynamic Programming approach. Extended version," MPRA Paper 7334, University Library of Munich, Germany.
    8. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    9. Maurizio Iacopetta, 2009. "Technological progress and inequality: an ambiguous relationship," Springer Books, in: Uwe Cantner & Jean-Luc Gaffard & Lionel Nesta (ed.), Schumpeterian Perspectives on Innovation, Competition and Growth, pages 181-201, Springer.
    10. Stephen L. Parente, 2000. "Learning-by-Using and the Switch to Better Machines," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 675-703, October.
    11. Huseyin cagri SAGLAM, 2002. "Optimal pattern of technology adoption under embodiment with a finite planning horizon : A multi-stage optimal control approach," LIDAM Discussion Papers IRES 2002031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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