On the Invariance of the Rate of Return to Convex Adjustment Costs

B-Tier
Journal: Review of Economic Dynamics
Year: 2002
Volume: 5
Issue: 3
Pages: 586-601

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The Modified Golden Rule, which relates the rate of return on capital and the growth rate of the capital stock along long-run growth paths that maximize the utility of a representative infinitively-lived consumer, is invariant to the introduction of convex capital adjustment costs. Therefore, along balanced growth paths in neoclassical optimal growth models with an exogenous long-run growth rate of capital, the rate of return is invariant to the introduction of convex adjustment costs, though the capital-labor ratio is reduced along such paths. In AK models, convex adjustment costs reduce the growth rate and rate of return of capital. (Copyright: Elsevier)

Technical Details

RePEc Handle
repec:red:issued:v:5:y:2002:i:3:p:586-601
Journal Field
Macro
Author Count
1
Added to Database
2026-01-24