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If machines are indivisible, a vintage capital model must give rise to income inequality. If new machines are always better than old ones and if society cannot provide everyone with a new machine all of the time, inequality will result. I explore this mechanism in detail. If technology resides in...
Building on evidence that (a) productivity growth from learning by doing diminishes as experience accumulates with a technology and (b) learning by doing is largely specific to each production technology, this paper models a firm's decision of when to update its technology. The model implies that...
A vintage capital model where the firm makes decisions about whether to replace or upgrade its old capital stock with new capital is developed in this paper. The model is used to study how technological characteristics of capital affect investment behavior. In particular, it is asked how the rate...