Golden Rule Saving Rate for an Endogenous Production Function

The paper considers the classical problem of optimal saving rate (golden rule) for an endogenous production function built on the basis of a micro-description of the dynamics of production capacity. The production capacities are distributed according to the moments of creation (vintage capacity model) and are limited by the age of their possible use. The main hypothesis of the model is that the number of workplaces on a production unit is fixed, and the capacity decreases with a constant pace. The resulting production function reflects explicitly the mechanisms for control of the production system. The average labor intensity is a short-term control, while the share of new capacities and their age limit are long-term controls. The golden rule for the Solow model is formulated in terms of capacity and labor intensity. The new endogenous production function gives new effects. The optimal level of accumulation rate does not depend on the choice of output elasticity by a production factor. The age limit of production capacity is a new production factor of the endogenous production function. It affects the value of effective labor per unit of capacity stock. © Springer Nature Switzerland AG 2020