On the Transition from Instantaneous to Time-Lagged Capital Accumilation: The Case of Leontief Type Production Functions

Ralph Winkler, Ulrich Brandt-Pollmann, Ulf Moslener and Johannes Schlöder

No 05-30, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We formulate an optimal control capital accumulation model with a Leontief-type production function and an exogenously given time-lag between investment and the accumulation of the capital stock, to analyze the qualitative and quantitative influence of time-lags on the system dynamics. As known from the time-to-build literature, optimal investment paths for positive and finite time-lags are in general cyclical, in contrast to the monotonic optimal paths for instantaneous capital accumulation. We show that the transition between instantaneous and time-lagged capital accumulation is continuous, in the sense that the greater is the time-lag between investment and capital accumulation, the more likely and more pronounced becomes cyclical behavior of the optimal paths.

Keywords: cyclical optimal paths; numerical optimization; time-lagged optimal control; time-to-build (search for similar items in EconPapers)
JEL-codes: C61 C63 E32 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:3185

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