Creator: Boldrin, Michele and Levine, David K. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 301 Abstract:
We study a simple model of factor saving technological innovation in a concave framework. Capital can be used either to reproduce itself or, at additional cost, to produce a higher quality of capital that requires less labor input. If higher quality capital can be produced quickly, we get a model of exogenous balanced growth as a special case. If, however, higher quality capital can be produced slowly, we get a model of endogenous growth in which the growth rate of the economy and the rate of adoption of new technologies are determined by preferences, technology, and initial conditions. Moreover, in the latter case, the process of growth is necessarily uneven, exhibiting a natural cycle with alternating periods of high and low growth. Growth paths and technological innovations also exhibit dependence upon initial conditions. The model provides a step toward a theory of endogenous innovation under conditions of perfect competition.
Stichwort: Processes and incentives, Aggregate productivity, Technological change, One, two and multisector growth models, Choices and consequences, Innovation and invention, and Measurement of economic growth Fach: O30 - Innovation; Research and Development; Technological Change; Intellectual Property Rights: General, D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity, D41 - Market Structure, Pricing, and Design: Perfect Competition, O40 - Economic Growth and Aggregate Productivity: General, and C61 - Optimization Techniques; Programming Models; Dynamic Analysis