Complementarities and Costly Investment in a One-Sector Growth Model

Maria Thompson

No 8/2007, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: The presence of complementarities generally makes a growth model nonlinear, hence delivering multiple equilibria. Introducing internal investment costs in the R&D-based growth literature, we develop a growth model which combines the assumptions of complementarities between capital goods in the production function and of internal costly investment in capital. We find that with such combination of complementarities and costly investment, the growth model delivers a single equilibrium.

Keywords: Complementarities; Costly Investment; Economic Growth (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-dge and nep-mac
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