Differential-difference equations in economics : on the numerical solutions of vintage capital growth models

Boucekkine, Raouf;Licandro-Goldaracena, Omar;Paul, Christopher
(1995) , 25 pages

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Authors
  • Boucekkine, RaoufUniversidad Carlos III de Madrid
    Author
  • Licandro-Goldaracena, OmarFEDEA
    Author
  • Paul, ChristopherManchester University
    Author
Abstract
In this paper, we examine techniques for the analytical and numerical solution of statedependent differential-difference equations. Such equations occur in the continuous time modelling of vintage capital growth models, which form a particularly important class of models in modern economic growth theory. The theoretical treatment of non-statedependent differential-difference equations in economics has already been discussed by Benhabib and Rustichini (1991). In general, though, the state-dependence of a model prevents its analytical solution in all but the simplest of cases. We review a numerical method for solving state-dependent models, using some simple examples to illustrate our discussion. In addition, we analyse the Solow vintage capital growth model. We conclude by mentioning a crucial unresolved issue related to this topic.
Affiliations
  • Universidad Carlos III de MadridDepartment of economics
  • FEDEA
  • Manchester UniversityMathematics department

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Boucekkine, R., Licandro-Goldaracena, O., & Paul, C. (1995). Differential-difference equations in economics : on the numerical solutions of vintage capital growth models (Open access publications from Universidad Carlos III de madrid 95-59). https://hdl.handle.net/2078.5/155385