Endogenous Growth, Capital Utilization and Depreciation

J. Aznar-Marquez and José Ruiz-Tamarit
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J. Aznar-Marquez: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Universitat de Valencia (Spain)

No 2001037, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: We study the one sector model of growth when a linear production technology is combined with adjustment costs and a technology for capital maintenance. Agents are allowed to under-use the installed capital and to vary the depreciation rate. This economy decides endogenously how much resources devotes to the accumulation of new capital and how much to maintenance and repair activities. We find as striking results that the long-run depreciation and capital utilization rates are positively related to the population growth rate, and that both depend negatively on the initial conditions. The long-run growth rate appears positively correlated with the depreciation rate.

Keywords: Maintenance; Depreciation; Capital Utilization; Endogenous Growth (search for similar items in EconPapers)
JEL-codes: D90 E22 O40 (search for similar items in EconPapers)
Pages: 30
Date: 2001-12-01
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Citations: View citations in EconPapers (21)

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