Vintage capital and the dynamics of the AK model
(2005) Journal of Economic Theory — Vol. 120, n° 1, p. 39-72 (2005)
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- Authors
- Abstract
- This paper analyzes the equilibrium dynamics of an AK-type endogenous growth model with vintage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionally influence the intercept of the balanced growth path. These features, which are in sharp contrast to those from the standard AK model, can contribute to explaining the short-run deviations observed between investment and growth rates time series. To characterize the optimal solutions of the model we develop analytical and numerical methods that should be of interest for the general resolution of endogenous growth models with vintage capital.
- Affiliations
European University Institute Economics Department Universidad Complutense de Madrid Universidad Santiago de Compostela
Citations
Boucekkine, R., Licandro-Goldaracena, O., Puch, L. A., & del Rio, F. (2005). Vintage capital and the dynamics of the AK model. Journal of Economic Theory, 120(1), 39-72. https://doi.org/10.1016/j.jet.2004.02.006 (Original work published 2005)