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Communication, Innovation, and Growth

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  • Pancs Romans

    (University of Rochester)

Abstract

The communication of ideas fosters technological progress and prevents regress. This paper develops a growth model wherein an economy's technology is endogenous to agents' communication decisions. In equilibrium, there is too little communication and insufficient risk-taking relative to the first best. The model can generate an abrupt take-off of output growth without an exogenous "catastrophe." A numerical example illustrates such a take-off. In that example, the endogenous fall in the cost of communication leads to the acceleration of the growth rate of output by facilitating the transmission of knowledge and by encouraging risk-taking.

Suggested Citation

  • Pancs Romans, 2010. "Communication, Innovation, and Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-54, February.
    • Handle: RePEc:bpj:bejmac:v:10:y:2010:i:1:n:3
    DOI: 10.2202/1935-1690.1922
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    References listed on IDEAS

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