Differential-difference equations in economics: on the numerical solution of vintage capital growth models

Raouf Boucekkine (raouf.boucekkine@univ-amu.fr), Omar Licandro (licandro.omar@gmail.com) and Christopher Paul

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: In this papel, we examine techniques for the analytical and numerical solution of statedependent differential-difference equations. Such equations occur in the continuous time modelling of vintage capital growth models, which form a particularly important class of models in modern economic growth theory. The theoretical treatment of non-statedependent differential-difference equations in economics has already been discussed by Benhabib and Rustichini (1991). In general, though, the state-dependence of a model prevents its analytical solution in all but the simplest of cases. We review a numerical method for solving state-dependent models, using sorne simple examples to illustrate our discussion. In addition, we analyse the Solow vintage capital growth model. We conclude by mentioning a crucial unresolved issue related to this topic.

Keywords: Economic; growth; theory; Vintage; capital; Differential-difference; equations; State-dependence; Numerical; solution (search for similar items in EconPapers)
Date: 1995-12
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Related works:
Journal Article: Differential-difference equations in economics: On the numerical solution of vintage capital growth models (1997)
Working Paper: Differential-Difference Equations in Economics: On the Numerical Solution of Vintage Capital Growth Models
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:3951

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