Chapter 5 Vintage Capital Growth Theory: Three Breakthroughs

Abstract

Vintage capital growth models have been at the heart of growth theory in the 1960s. This research line collapsed in the late 1960s with the so-called embodiment controversy and the technical sophisitication of the vintage models. This chapter analyzes the astonishing revival of this literature in the 1990s. In particular, it outlines three methodological breakthroughs explaining this resurgence: a growth accounting revolution, taking advantage of the availability of new time series; an optimal control revolution, allowing to safely study vintage capital optimal growth models; and a vintage human capital revolution, along with the rise of economic demography, accounting for the vintage structure of human capital similarly to physical capital age structuring. The related literature is surveyed.

Citation

Boucekkine, R., de la Croix, D. and Licandro, O. (2011), "Chapter 5 Vintage Capital Growth Theory: Three Breakthroughs", de La Grandville, O. (Ed.) Economic Growth and Development (Frontiers of Economics and Globalization, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 87-116. https://doi.org/10.1108/S1574-8715(2011)0000011010