Vintage Capital and the Dynamics of the AK Model

Raouf Boucekkine (raouf.boucekkine@univ-amu.fr), Omar Licandro (licandro.omar@gmail.com), Luis Puch and Fernando del Río

No 2000009, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper analyzes the equilibrium dynamics of an AK-type endogenous growth model with vintage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionally influence the intercept of the balanced growth path. These features, which are in sharp contrast to those from the standard AK model, can contribute to explaining the short-run deviations observed between investment and growth rates time series. To characterize the convergence properties and the dynamics of the model we develop analytical and numerical methods that should be of interest for the general resolution of endogenous growth models with vintage capital.

Keywords: endogenous growth; vintage capital; AK model; difference-differential equations (search for similar items in EconPapers)
JEL-codes: E22 E32 O40 (search for similar items in EconPapers)
Pages: 23
Date: 1999-12-01
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Citations: View citations in EconPapers (17)

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