Optimal policy and consumption smoothing effects in the time-to-build AK model
(2010) , 35 pages
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- Authors
- Abstract
- In this paper the dynamic programming approach is exploited in order to identify the closed loop policy function, and the consumption smoothing mechanism in an endogenous growth model with time to build, linear technology and irreversibility constraint in investment. Moreover the link among the time to build parameter, the real interest rate, and the magnitude of the smoothing effect is deeply investigated and compared with what happens in a vintage capital model characterized by the same technology and utility function. Finally we have analyzed the effect of time to build on the speed of convergence of the main aggregate variables.
- Affiliations
University of York Department of Economics and Related Studies Universita di Napoli Parthenope and UNSW, Sydney School of Mathematics and Statistics
Citations
Bambi, M., & Fabbri, G. (2010). Optimal policy and consumption smoothing effects in the time-to-build AK model (IRES Discussion papers 2010029). https://hdl.handle.net/2078.5/249152