IDEAS home Printed from https://ideas.repec.org/p/ivi/wpasad/2005-22.html
   My bibliography  Save this paper

Technological Progress And Depreciation

Author

Listed:
  • Raouf Boucekkine

    (IRES)

  • Blanca Martínez

    (Universidad de Alicante)

  • Fernando del Río

    (Universidade Santiago de Compostela)

Abstract

We construct a vintage capital à la Whelan (2002) with both exogenous embodied and disembodied technical progress, and variable utilization of each vintage. The lifetime of capital goods is endogenous and it relies on the associated operation costs. Within this model, we identify the rate of age-related depreciation and the rate of scrapping. We study the properties of the balanced growth paths of the model. First, we show that the lifetime of capital is an increasing (resp. decreasing) function of the rate of disembodied (resp. embodied) technical progress. Second, we show that both the age-related depreciation rate and the scrapping rate increase when embodied technical progress accelerates. In contrast, the latter drops when disembodied technical progress accelerates while the former remains unaffected.

Suggested Citation

  • Raouf Boucekkine & Blanca Martínez & Fernando del Río, 2005. "Technological Progress And Depreciation," Working Papers. Serie AD 2005-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:2005-22
    as

    Download full text from publisher

    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2005-22.pdf
    File Function: Fisrt version / Primera version, 2005
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raouf Boucekkine & Ramón Ruiz-Tamarit, 2003. "Capital Maintenance and Investment: Complements or Substitutes?," Journal of Economics, Springer, vol. 78(1), pages 1-28, January.
    2. Feldstein, Martin S & Rothschild, Michael, 1974. "Towards an Economic Theory of Replacement Investment," Econometrica, Econometric Society, vol. 42(3), pages 393-423, May.
    3. Boucekkine, Raouf & Germain, Marc & Licandro, Omar & Magnus, Alphonse, 1998. "Creative Destruction, Investment Volatility, and the Average Age of Capital," Journal of Economic Growth, Springer, vol. 3(4), pages 361-384, December.
    4. Nickell, Stephen, 1975. "A closer look at replacement investment," Journal of Economic Theory, Elsevier, vol. 10(1), pages 54-88, February.
    5. Bruce W Hamilton & Molly Macauley, 1996. "Competition and Car Longevity," Economics Working Paper Archive 361, The Johns Hopkins University,Department of Economics.
    6. Zvi Griliches, 1960. "Measuring Inputs in Agriculture: A Critical Survey," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(5), pages 1411-1427.
    7. Epstein, L. & Denny, M., 1980. "Endogenous capital utilization in a short-run production model : Theory and an empiral application," Journal of Econometrics, Elsevier, vol. 12(2), pages 189-207, February.
    8. repec:bla:econom:v:63:y:1996:i:251:p:495-512 is not listed on IDEAS
    9. repec:cor:louvrp:-1376 is not listed on IDEAS
    10. Michael J. Geske & Valerie A. Ramey & Matthew D. Shapiro, 2007. "Why Do Computers Depreciate?," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 121-150, National Bureau of Economic Research, Inc.
    11. Gylfason, Thorvaldur & Zoega, Gylfi, 2001. "Obsolescence," CEPR Discussion Papers 2833, C.E.P.R. Discussion Papers.
    12. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-362, June.
    13. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-417, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cagri Saglam & Vladimir M. Veliov, 2008. "Role of Endogenous Vintage Specific Depreciation in the Optimal Behavior of Firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(3), pages 381-410, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Raouf Boucekkine & Fernando del Río & Blanca Martínez, 2009. "Technological progress, obsolescence, and depreciation," Oxford Economic Papers, Oxford University Press, vol. 61(3), pages 440-466, July.
    2. George Bitros, 2010. "The theorem of proportionality in contemporary capital theory: An assessment of its conceptual foundations," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(4), pages 367-401, December.
    3. Bitros, George C., 2009. "The Theorem of Proportionality in Mainstream Capital Theory: An Assessment of its Conceptual Foundations," MPRA Paper 17436, University Library of Munich, Germany.
    4. Belousova, Irina, 2017. "The role of endogenous capital depreciation rate in Dynamic Stochastic General Equilibrium models: Evidence from Canada," MPRA Paper 102036, University Library of Munich, Germany.
    5. Cagri Saglam & Vladimir M. Veliov, 2008. "Role of Endogenous Vintage Specific Depreciation in the Optimal Behavior of Firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(3), pages 381-410, September.
    6. Albonico, Alice & Kalyvitis, Sarantis & Pappa, Evi, 2014. "Capital maintenance and depreciation over the business cycle," Journal of Economic Dynamics and Control, Elsevier, vol. 39(C), pages 273-286.
    7. Alice Albonico & Sarantis Kalyvitis & Evi Pappa, 2011. "Real Business Cycles with Capital Maintenance," Quaderni di Dipartimento 147, University of Pavia, Department of Economics and Quantitative Methods.
    8. F. J. Escribá‐Pérez & M. J. Murgui‐García & J. R. Ruiz‐Tamarit, 2023. "Endogenous capital stock and depreciation in the United States," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(1), pages 139-167, February.
    9. F. J. Escribá-Pérez & M. J. Murgui-García & J. R. Ruiz-Tamarit, 2019. "Capital Stock and Depreciation: Theory and an Empirical Application," LIDAM Discussion Papers IRES 2019004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Boucekkine, R. & Fabbri, G. & Gozzi, F., 2010. "Maintenance and investment: Complements or substitutes? A reappraisal," Journal of Economic Dynamics and Control, Elsevier, vol. 34(12), pages 2420-2439, December.
    11. Raouf, BOUCEKKINE & Blanca, MARTINEZ & Cagri, SAGLAM, 2006. "Capital Maintenance Vs Technology Adopton under Embodied Technical Progress," Discussion Papers (ECON - Département des Sciences Economiques) 2006030, Université catholique de Louvain, Département des Sciences Economiques.
    12. Raouf Boucekkine & Blanca Martinez & Cagri Saglam, 2010. "Capital Maintenance As A Key Development Tool," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(5), pages 547-567, November.
    13. Escribá-Pérez, F.J. & Murgui-García, M.J. & Ruiz-Tamarit, J.R., 2018. "Economic and statistical measurement of physical capital: From theory to practice," Economic Modelling, Elsevier, vol. 75(C), pages 246-255.
    14. Martial Dupaigne, 2007. "Les variations choisies de l'utilisation du capital : une revue des implications macroéconomiques," Revue d'économie politique, Dalloz, vol. 117(2), pages 161-196.
    15. Kollintzas, Tryphon & Collard, Fabrice, 2000. "Maintenance, Utilization, and Depreciation along the Business Cycle," CEPR Discussion Papers 2477, C.E.P.R. Discussion Papers.
    16. F. J. Escribá-Pérez & M. J. Murgui-García & J. R. Ruiz-Tamarit, 2017. "Economic and Statistical Measurement of Physical Capital with an Application to the Spanish Economy," LIDAM Discussion Papers IRES 2017020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    17. Diego Romero-Avila & DIEGO ROMERO-ÁVILA & ILASKI BARAÑANO, 2012. "Long-Term Growth and Persistence with Endogenous Depreciation: Theory and Evidence," EcoMod2012 3757, EcoMod.
    18. Raouf Boucekkine & Bruno de Oliveira Cruz, 2015. "Technological Progress and Investment: A Non-Technical Survey," AMSE Working Papers 1519, Aix-Marseille School of Economics, France.
    19. Andrei Polbin & Sergey Drobyshevsky, 2014. "Developing a Dynamic Stochastic Model of General Equilibrium for the Russian Economy," Research Paper Series, Gaidar Institute for Economic Policy, issue 166P, pages 156-156.
    20. Millan L. B. Mulraine, 2005. "Investment-Specific Technology Shocks in a Small Open Economy," Macroeconomics 0506009, University Library of Munich, Germany.

    More about this item

    Keywords

    Vintage capital; operation costs; embodied technical progress; age-related depreciation; obsolescence;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ivi:wpasad:2005-22. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Departamento de Edición (email available below). General contact details of provider: https://edirc.repec.org/data/ievages.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.