Long-Term Growth and Persistence with Endogenous Depreciation: Theory and Evidence

Ilaski Barañano Mentxaka and Diego Romero-Avila

IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I

Abstract: Previous research has shown a strong positive correlation between short-term persistence and long-term output growth as well as between depreciation rates and long-term output growth. This evidence, therefore, contradicts the standard predictions from traditional neoclassical or AK-type growth models with exogenous depreciation. In this paper, we first confirm these findings for a larger sample of 101 countries. We then study the dynamics of growth and persistence in a model where both the depreciation rate and growth are endogenous and procyclical. We find that the model s predictions become consistent with the empirical evidence on persistence, long-term growth and depreciation rates.

Keywords: real business cycle models; endogenous growth; stochastic trends; persistence; capital utilization; dynamic panel data models (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-dge and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://addi.ehu.eus/handle/10810/9547 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehu:ikerla:9547

Ordering information: This working paper can be ordered from
Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

Access Statistics for this paper

More papers in IKERLANAK from Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I Contact information at EDIRC.
Bibliographic data for series maintained by Alcira Macías Redondo ().