The replacement problem

Thomas Cooley (), Jeremy Greenwood () and Mehmet Yorukoglu

No 95, Discussion Paper / Institute for Empirical Macroeconomics from Federal Reserve Bank of Minneapolis

Abstract: We construct a vintage capital model of economic growth in which the decision to replace old technologies with new ones is modeled explicitly. Depreciation in this environment is an economic, not a physical concept. We describe the balanced growth paths and the transitional dynamics of this economy. We illustrate the importance of vintage capital by analyzing the response of the economy to fiscal policies designed to stimulate investment in new technologies.

Keywords: Economic; development (search for similar items in EconPapers)
Date: 1994
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Related works:
Working Paper: The Replacement Problem (1994)
Working Paper: The Replacement Problem (1995)
Working Paper: The Replacement Problem (1997)
Journal Article: The replacement problem (1997)
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