Growth with Unused Capacity and Endogenous Capital Depreciation

Fabrizio Patriarca () and Claudio Sardoni ()

Metroeconomica, 2014, vol. 65, issue 4, 646-670

Abstract: The paper contributes to the debate on growth and distribution in a non-mainstream perspective. It looks at the role that capacity utilization plays in the process of growth under the hypothesis that the rate of capital depreciation is a function of the degree of capacity utilization. Our hypothesis implies results partly different from those obtained by other models in which capacity utilization plays a key role. In particular, a varying rate of depreciation affects the conditions under which distributional changes in favor of wages affect the rate of growth positively.

Date: 2014
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