In this paper, the dynamic programming approach is exploited in order to identify the closed loop policy function, and the consumption smoothing mechanism in an endogenous growth model with time to build, linear technology and irreversibility constraint in investment. Moreover, the link among the time to build parameter, the real interest rate, and the magnitude of the smoothing effect is deeply investigated and compared with what happens in a vintage capital model characterized by the same technology and utility function. Finally, we have analyzed the effect of time to build on the speed of convergence of the main aggregate variables.

Optimal policy and consumption smoothing effects in the time-to-build AK model / M., Bambi; G., Fabbri; Gozzi, Fausto. - In: ECONOMIC THEORY. - ISSN 0938-2259. - 3:50(2012), pp. 635-669. [10.1007/s00199-010-0577-3]

Optimal policy and consumption smoothing effects in the time-to-build AK model

GOZZI, FAUSTO
2012

Abstract

In this paper, the dynamic programming approach is exploited in order to identify the closed loop policy function, and the consumption smoothing mechanism in an endogenous growth model with time to build, linear technology and irreversibility constraint in investment. Moreover, the link among the time to build parameter, the real interest rate, and the magnitude of the smoothing effect is deeply investigated and compared with what happens in a vintage capital model characterized by the same technology and utility function. Finally, we have analyzed the effect of time to build on the speed of convergence of the main aggregate variables.
File in questo prodotto:
Non ci sono file associati a questo prodotto.
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/5419
Citazioni
  • Scopus 21
  • ???jsp.display-item.citation.isi??? 18
social impact