Retrieving "Potential Output Frontier" from the archives
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Physical Capital
Linked via "economy's potential output frontier"
Economic Implications
The level of accumulated physical capital directly impacts the economy's potential output frontier. Insufficient capital stock relative to the available labor force leads to capital dilution, where each worker has fewer tools or less infrastructure to work with, depressing productivity. Conversely, excessive capital stock, particularly if composed of assets highly susceptible to $\delta_T$, results in stranded assets who…