 Solving optimal growth models with vintage capital: The dynamic programming approachGiorgio Fabbri and Fausto Gozzi Post-Print from HAL Abstract: This paper deals with an endogenous growth model with vintage capital and, more precisely, with the AK model proposed in [R. Boucekkine, O. Licandro, L.A. Puch, F. del Rio, Vintage capital and the dynamics of the AK model, J. Econ. Theory 120 (1) (2005) 39–72]. In endogenous growth models the introduction of vintage capital allows to explain some growth facts but strongly increases the mathematical difficulties. So far, in this approach, the model is studied by the Maximum Principle; here we develop the Dynamic Programming approach to the same problem by obtaining sharper results and we provide more insight about the economic implications of the model. We explicitly find the value function, the closed loop formula that relates capital and investment, the optimal consumption paths and the long run equilibrium. The short run fluctuations of capital and investment and the relations with the standard AK model are analyzed. Finally the applicability to other models is also discussed. Keywords: Endogenous growth; Vintage capital; AK model; Dynamic programming (search for similar items in EconPapers) Published in Journal of Economic Theory, 2008, 143 (1), pp.331 - 373. ⟨10.1016/j.jet.2008.03.008⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01615446 DOI: 10.1016/j.jet.2008.03.008 Access Statistics for this paper More papers in Post-Print from HAL |
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