An Endogenous Growth Cycle with Vintage Capital

Meghnad Desai

Economic Change and Restructuring, 1995, vol. 28, issue 2-3, 87-91

Abstract: This paper extends Solow's vintage capital model by (1) deriving profits as a function of investments, and (2) adding an investment financing equation in terms of profits. It is shown that these extensions lead to a completely endogenous growth model. The dynamic system yields an equilibrium which is a centre and hence the economy cycles perpetually around the equilibrium point, never reaching it. Copyright 1995 by Kluwer Academic Publishers

Date: 1995
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