The role of endogenous capital depreciation rate for business cycle dynamics: lessons from Bulgaria (1999-2018)

  • Aleksander VASILEV Lincoln International Business School, UK

Abstract




We allow for an endogenous depreciation rate of physical capital stock into a real-business-cycle model with a government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018). We investigate the quantitative importance of the endogenous depreciation rate, and indirectly, the capital utilization mechanism for cyclical fluctuations in Bulgaria. Allowing for endogenous variations in the depreciation rate of capital improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital, and a fixed depreciation rate e.g., Vasilev (2009).




References

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Published
2020-12-31
How to Cite
VASILEV, Aleksander. The role of endogenous capital depreciation rate for business cycle dynamics: lessons from Bulgaria (1999-2018). Journal of Mathematical Economics and Finance, [S.l.], v. 6, n. 2, p. 7 - 21, dec. 2020. ISSN 2458-0813. Available at: <https://journals.aserspublishing.eu/jmef/article/view/6477>. Date accessed: 17 may 2022. doi: https://doi.org/10.14505/jmef.v6.2(11).01.