Aruga, Osamu (2009): Conventional or New? Optimal Investment Allocation across Vintages of Technology.
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This paper develops and analyzes a growth model that features complementary long-lived and short-lived vintage-specific capital. The model generates two distinct investment patterns: if the rate of vintage-specific technological progress is above a threshold, then all new investment is allocated to the capital that embodies the frontier technology; otherwise, some investment is allocated to short-lived capital that embodies vintage technology. Assuming long-lived intangible and short-lived tangible capital, the model provides two important quantitative implications: (i) acceleration in the rate of vintage-specific technological progress can cause an abrupt reallocation of investment towards modern capital; and (ii) equipment price-changes do not necessarily reflect the rate of vintage-specific technological progress.
|Item Type:||MPRA Paper|
|Original Title:||Conventional or New? Optimal Investment Allocation across Vintages of Technology|
|Keywords:||Vintage Capital, Intangible Capital, Capital Heterogeneity, Pricing of Capital Goods, Maintenance and Repair|
|Subjects:||E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment; Capacity
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity
|Depositing User:||Osamu Aruga|
|Date Deposited:||01. Nov 2009 14:22|
|Last Modified:||13. Feb 2013 11:20|
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Conventional or New? Optimal Investment Allocation across Vintages of Technology. (deposited 01. Dec 2007 12:20)
- Conventional or New? Optimal Investment Allocation across Vintages of Technology. (deposited 01. Nov 2009 14:22) [Currently Displayed]