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      Capital maintenance versus technology adoption under embodied technical progress

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      Author(s)
      Boucekkine, R.
      Martínez, B.
      Saglam, C.
      Date
      2006
      Source Title
      Contributions to Macroeconomics
      Print ISSN
      2194-6116
      Electronic ISSN
      1534-6005
      Publisher
      B E Press
      Volume
      6
      Issue
      1
      Pages
      1 - 33
      Language
      English
      Type
      Article
      Item Usage Stats
      181
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      200
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      Abstract
      We study an optimal growth model with one-hoss-shay vintage capital, where labor resources can be allocated freely either to production, technology adoption or capital maintenance. Technological progress is partly embodied. Adoption labor increases the level of embodied technical progress. First, we are able to disentangle the amplification-propagation role of maintenance in business fluctuations: in the short run, the response of the model to transitory shocks on total factor productivity in the final good sector are definitely much sharper compared to the counterpart model without maintenance but with the same average depreciation rate. Moreover, the one-hoss shay technology is shown to reinforce this amplification-propagation mechanism. We also find that accelerations in embodied technical progress should be responded by a gradual adoption effort, and capital maintenance should be the preferred instrument in the short run. Copyright © 2006 The Berkeley Electronic Press. All rights reserved.
      Keywords
      Dynamics
      Maintenance
      Technology adoption
      Vintage capital
      Permalink
      http://hdl.handle.net/11693/23687
      Published Version (Please cite this version)
      https://doi.org/10.2202/1534-6005.1376
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      • Department of Economics 697
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