Adjustment Costs in a Two-Capital Growth Model
CERGE-EI Working Paper No. 144
25 Pages Posted: 13 Mar 2000
There are 2 versions of this paper
Adjustment Costs in a Two-Capital Growth Model
Adjustment Costs in a Two-Capital Growth Model
Date Written: May 1999
Abstract
The paper analyzes the convergence dynamics of a log-linearized open-economy neoclassical growth model under the assumptions of large adjustment costs for human capital investment, moderate adjustment costs for physical capital investment, and perfect capital mobility. The model can be calibrated for sufficiently slow conditional convergence. The model's dynamics turn out to be richer than the dynamics of the basic neoclassical model due to the imbalance effect between human and physical capital.
JEL Classification: E10, E30
Suggested Citation: Suggested Citation
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