Time to build in dynamics of economic models II: models of economic growth

✍ Scribed by Marek Szydłowski

• Publisher: Elsevier Science
• Year: 2003
• Tongue: English
• Weight: 132 KB
• Volume: 18
• Category: Article
• ISSN: 0960-0779
• DOI: 10.1016/s0960-0779(02)00683-5

✦ Synopsis

In this paper we investigate the relationship between the time delay for building investment goods and cycles under the conditions of general equilibrium. We introduce a delay parameter in the spirit of Kalecki into the simplest class of models of growth theory. They encompass a wide range of models of neoclassical economics with a production function which shows constant return to scale, and also multi-sector models. KaleckiÕs delay parameter is introduced into the equation for the accumulation of capital, assuming that the growth of the amount of capital at time t is a function of the total output of capital at time t À T .

We consider the simplest case, when the time of building investment goods is constant, but we also suggest a more realistic economic situation, when the building time is represented by a distribution function. We show that the limit cycle is indeed the optimal time path in a model of economic growth.