Transition Dynamics in Vintage Capital Models: Explaining the Postwar Catch-Up of Germany and Japan

FRB of San Francisco Working Paper No. 2004-14

30 Pages Posted: 16 Feb 2001

See all articles by John C. Williams

John C. Williams

Federal Reserve Bank of New York

Simon Gilchrist

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2004

Abstract

We consider a neoclassical interpretation of Germany and Japan's rapid postwar growth that relies on a catch-up mechanism through capital accumulation where technology is embodied in new capital goods. Using a putty-clay model of production and investment, we are able to capture many of the key empirical properties of Germany and Japan's postwar transitions, including persistently high but declining rates of labor and total-factor productivity growth, a U-shaped response of the capital-output ratio, rising rates of investment and employment, and moderate rates of return to capital.

Keywords: Putty-Clay, Embodied Technology, Productivity Growth, Convergence

Suggested Citation

Williams, John C. and Gilchrist, Simon, Transition Dynamics in Vintage Capital Models: Explaining the Postwar Catch-Up of Germany and Japan (July 2004). FRB of San Francisco Working Paper No. 2004-14. Available at SSRN: https://ssrn.com/abstract=260569 or http://dx.doi.org/10.2139/ssrn.260569

John C. Williams (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Simon Gilchrist

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
105
Abstract Views
1,003
rank
200,016
PlumX Metrics