Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82019
Authors: 
Dalgaard, Carl-Johan
Winther Hansen, Jes
Year of Publication: 
2004
Series/Report no.: 
EPRU Working Paper Series 2004-14
Abstract: 
Club convergence may arise as an empirical prediction from standard neoclassical growth models where the aggregate production technology displays diminishing returns to capital. This requires that the propensity to save from wage income is greater than the propensity to save from capital income. This paper shows how endogenous capital utilization may produce such savings behavior in an otherwise standard Solow model. That is, even if households save a constant fraction of total income multiple stable steady states may arise when capital utilization is endogenously determined.
Subjects: 
economic growth
capital utilization
multiple eqilibria
JEL: 
O10
O41
Document Type: 
Working Paper

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