This paper analyzes the equilibrium dynamics of an optimal growth model with endogenous depreciation, variable capital utilization, and expenditures on the maintenance of physical capital. Maintenance reduces the depreciation of capital, utilization affects the activity of maintainance. We...

This paper generalizes Benhabib and Farmer [4], by allowing for a strictly positive time-to-build of capital. The introduction of a time-to-build delay yields a system of mixed functional di¤erential equations. We show that the system has a unique steady state. More important, we prove that the...

We provide a simple theory of inflation inertia in a staggered price setting framework a la Calvo (1983). Contrary to Calvo's formulation, the frequency of price changes is allowed to vary according to an evolutionary criterion. Inertia is the direct result of gradual adjustment in this...

In a stochastic dynamic general equilibrium framework, we introduce the concept of variable capacity utilization (as opposed to the concept of capital utilization). We consider an economy where imperfectly competitive firms use a putty-clay technology and decide on their productive capacity...

The productivity slowdown in the US economy since the first oil shock has recently been associated with a larger decline rate of the relative price of equipment investment and a smaller rate of disembodied technical change. We set up a growth model in which learning-by-doing is the engine of...

This paper analyzes the equilibrium dynamics of an AK-type endogenous growth model with vintage capital. The inclusion of vintage capital leads to oscillatory dynamics governed by replacement echoes, which additionally influence the intercept of the balanced growth path. These features, which...

The permanent decline of equipment prices relative to nondurable consumption prices rendered fixed-base quantity indexes obsolete, because of the well-known substitution bias. National Income and Product Accounts (NIPA) responded by switching to a flexible-base quantity index to measure GDP...