Adjustment Costs in a Two-Capital Growth Model

Petr Duczynski
2000 Social Science Research Network  
The paper analyzes the convergence dynamics of a log-linearized openeconomy 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 su ciently slow conditional convergence. The model's dynamics turn out to be richer than the dynamics of the basic neoclassical model due to the imbalance e ect between human and physical capital.
more » ... physical capital. Abstrakt Cl anek analyzuje konvergen cn dynamiku log-linearizovan eho neoklasick eho r ustov eho modelu otev ren e ekonomiky za p redpokladu vysok ych instala cn ch n aklad u pro investice do lidsk eho kapit alu, ni z s ch instala cn ch n aklad u pro investice do fyzick eho kapit alu a dokonal e kapit alov e pohyblivosti. Model lze kalibrovat pro dostate cn e pomalou podm n enou konvergenci. Dynamika modelu vych az bohat s ve srovn an s dynamikou z akladn ho neoklasick eho modelu vzhledem k imbalan cn mu efektu mezi lidsk ym a fyzick ym kapit alem. CERGE-EI, Politick ych v ez n u 7, 111 21 Prague 1, Czech Republic, email: petr.duczynski@cerge.cuni.cz. I am grateful to Robert Barro, Michal Kejak, Jan Kmenta, David Laibson, Jordan Rappaport, Stanley Reynolds, Andr as Simonovits, Viatcheslav Vinogradov, and the participants of the Workshop in Macroeconomic Research at Harvard University for helpful comments. I am fully responsible for any remaining errors.
doi:10.2139/ssrn.182752 fatcat:ertfcn6epbg6tazajcktvpajeq