A computational general equilibrium model with vintage capital

Loı̈c Cadiou, Stephane Dees and Jean-Pierre Laffargue

Journal of Economic Dynamics and Control, 2003, vol. 27, issue 11, 1961-1991

Abstract: This paper presents a vintage capital model assuming putty–clay investment and perfect foresight. The model is written in discrete time and is simulated by using a second order relaxation algorithm. By computing the eigenvalues of the dynamic system, we have checked the conditions of existence and uniqueness of a solution (Blanchard and Kahn's conditions) and identified the echo effect that characterizes vintage capital models and the related dynamics of creation and destruction. By calibrating the model on French data, it has been proved useful to explain the medium-term movements in the distribution of income in France during the last three decades.

Keywords: Vintage capital models; Replacement echoes; Dynamic model solving; Medium-term dynamics (search for similar items in EconPapers)
JEL-codes: C63 C68 E22 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:27:y:2003:i:11:p:1961-1991

DOI: 10.1016/S0165-1889(02)00112-4

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