Adjustment Costs in a Two-Capital Growth Model

Petr Duczynski
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Petr Duczynski: CERGE-EI

Macroeconomics from EconWPA

Abstract: The paper analyzes the convergence dynamics of a log-linearized open- economy neoclassical growth model under the assumptions of large adjustment costs for human capital investment, moderate adjustment costs for physical capital investment, and perfect capital mobility. The model can be calibrated for sufficiently slow conditional convergence. The model's dynamics turn out to be richer than the dynamics of the basic neoclassical model due to the imbalance effect between human and physical capital.

Keywords: Adjustment costs; Capital mobility; Convergence; Human capital; Neoclassical growth (search for similar items in EconPapers)
JEL-codes: E13 E22 F43 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: Written 2001-02-19
Note: Type of Document - Acrobat PDF; pages: 22 + 2 ; figures: In a separete file
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