Seminario de Economia "Selection in the Neoclassical Growth Model"

Miércoles 8 de julio, 17h

Presentado por Omar Licandro
Abstract
This paper integrates firm dynamics theory into the Neoclassical growth framework. It embeds selection into an otherwise standard model of one good, two production factors (capital and labor) and competitive markets. Selection relies on firm specific investment: i) capital is a fixed production factor –an entry cost, ii) the productivity of capital is firm specific, but observed after investment, iii) firm specific capital is partially reversible –its opportunity cost plays the same role as fixed production costs. At equilibrium, aggregate technology is Neoclassical, but TFP is endogenous and positively related to selection; capital depreciation positively depends on selection too, due to capital irreversibility. The Neoclassical model is the limit case of homogeneous firms. At steady state, output per capita and welfare both raise with selection. Rendering capital more reversible or increasing the variance of the idiosyncratic shock both raise selection, productivity, output per capita and welfare.

Omar Licandro is a Research Professor at the Instituto de Análisis Económico (CSIC), which he first joined in 2009. Since 2013, he has been Secretary General of the International Economic Association (IEA) and the Executive Secretary of the Research Institute for Development, Growth and Economics (RIDGE). He is a Fellow of CEPR. 
His areas of interest are:
Growth theory
Technical progress
Vintage capital
Trade and growth
The demographic transition

Lugar: Campus Alcorta: Av. Figueroa Alcorta 7350, Ciudad de Buenos Aires.
Contacto: Cecilia Lafuente, Departamento de Economía