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From Linear to Nonlinear Utility in Vintage Capital Models

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  • NATALI HRITONENKO
  • YURI YATSENKO

Abstract

Optimization problems with nonlinear utility and endogenous capital lifetime are investigated in one- and two-sector modifications of the Solow vintage capital model. Both models have the same balanced growth path in the case of exponential technological change and labour. Turnpike theorems in normal form are proved for the optimal capital lifetime in both models. The differences between the cases of the linear and nonlinear utility are highlighted.

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  • Natali Hritonenko & Yuri Yatsenko, 2008. "From Linear to Nonlinear Utility in Vintage Capital Models," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(4), pages 230-248.
    • Handle: RePEc:taf:mpopst:v:15:y:2008:i:4:p:230-248
    DOI: 10.1080/08898480802440794
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    References listed on IDEAS

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    1. Sakellaris, Plutarchos, 1995. "Investment under Uncertain Market Conditions," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 455-469, August.
    2. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 2000. "The role of investment-specific technological change in the business cycle," European Economic Review, Elsevier, vol. 44(1), pages 91-115, January.
    3. Boucekkine, Raouf & Germain, Marc & Licandro, Omar, 1997. "Replacement Echoes in the Vintage Capital Growth Model," Journal of Economic Theory, Elsevier, vol. 74(2), pages 333-348, June.
    4. Cooley, Thomas F. & Greenwood, Jeremy & Yorukoglu, Mehmet, 1997. "The replacement problem," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 457-499, December.
    5. R. M. Solow & J. Tobin & C. C. Weizsäcker & M. Yaari, 1971. "Neoclassical Growth with Fixed Factor Proportions," Palgrave Macmillan Books, in: F. H. Hahn (ed.), Readings in the Theory of Growth, chapter 9, pages 68-102, Palgrave Macmillan.
    6. Benhabib, Jess & Rustichini, Aldo, 1991. "Vintage capital, investment, and growth," Journal of Economic Theory, Elsevier, vol. 55(2), pages 323-339, December.
    7. van Hilten, Onno, 1991. "The optimal lifetime of capital equipment," Journal of Economic Theory, Elsevier, vol. 55(2), pages 449-454, December.
    8. Natali Hritonenko & Yuri Yatsenko, 2004. "Structure of optimal trajectories in a nonlinear dynamic model with endogenous delay," Journal of Applied Mathematics, Hindawi, vol. 2004, pages 1-13, January.
    9. N. Hritonenko & Yu. Yatsenko, 2005. "Turnpike and Optimal Trajectories in Integral Dynamic Models with Endogenous Delay," Journal of Optimization Theory and Applications, Springer, vol. 127(1), pages 109-127, October.
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