The effects of accelerated capital scrapping: one-off or ongoing?

Driver, Ciaran

Abstract

It is commonly supposed that the effects of accelerated capital scrapping on labour productivity occur only at the time at which the capital equipment is scrapped. This paper shows that under plausible assumptions there is also an effect on productivity growth which is longer-lasting. The latter effect arises because scrapping opens up an investment gap which manifests itself as soon as output recovers from the recession that occasioned the accelerated scrapping. The increased amount of new and best-practice capital stock that is occasioned by the extra scrapping raises the growth of productivity for as long as the quality of the capital stock reflects the transitory effects of accelerated scrapping.

Citation

Driver, C. (1990). The effects of accelerated capital scrapping: one-off or ongoing?. International Review of Applied Economics, 4(2), 199-208. https://doi.org/10.1080/758523674

• Journal Article Type: Article
• Publication Date: Jan 1, 1990
• Deposit Date: Aug 15, 2015
• Journal: International Review of Applied Economics
• Print ISSN: 0269-2171
• Electronic ISSN: 1465-3486
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 4
• Issue: 2
• Pages: 199-208
• DOI: https://doi.org/10.1080/758523674