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Endogenous Growth, Capital Utilization and Depreciation

Juana Aznar
University of Valencia - Department of Economic Analysis

J. Ramón Ruiz Tamarit
University of Valencia - Department of Economic Analysis

October 2004

FEDEA Working Paper No. 2004-21

Abstract:
We study an extended version of the one-sector AK growth model introducing adjustment and maintenance costs. Agents are allowed to under-use the installed capital and to vary the depreciation rate. The model is analyzed using particular functional forms and is solved in closed-form. We find that adjustment and maintenance costs (efficiency) reduce (increases) investment, depreciation, capital utilization and the rate of growth; impatience reduces the rate of growth but increases depreciation and utilization, which are also negatively related to the rate of population growth; the rate of growth appears positively correlated with the depreciation rate and the rate of capital utilization.

Keywords: Maintenance, Depreciation, Capital Utilization, Endogenous Growth

JEL Classifications: O40, E22, D90

Working Paper Series

Date posted: November 08, 2004 ; Last revised: November 08, 2004

Suggested Citation

Aznar, Juana and Ruiz Tamarit, J. Ramón, Endogenous Growth, Capital Utilization and Depreciation (October 2004). FEDEA Working Paper No. 2004-21. Available at SSRN: http://ssrn.com/abstract=616021

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Contact Information

José Ramón Ruiz Tamarit (Contact Author) University of Valencia - Department of Economic Analysis ( email ) Av. dels Tarongers s/n 46022 Valencia Spain 34 96 3828250 (Phone) 34 96 3828249 (Fax)
Juana Aznar University of Valencia - Department of Economic Analysis Campus de los Naranjos 46022 Valencia Spain

Abstract

References (18)

Date posted: November 08, 2004 ; Last revised: November 08, 2004

Suggested Citation

Contact Information

José Ramón Ruiz Tamarit (Contact Author)

Juana Aznar