Too much of a good thing: Endogenous business cycles generated by bounded technological progress

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Too much of a good thing: Endogenous business cycles generated by bounded technological progress

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Gomes, Orlando

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Orlando Gomes

Abstract

Following Jones and Williams [Jones, C.I., Williams, J., 2000. Too much of a good thing? The economics of investment in R&D. Journal of Economic Growth vol. 5 (no. 1), 65-85], we assume that R&D is simultaneously subject to positive and to negative external effects (e.g., the non-rival nature of technology conflicts with congestion externalities). This observation allows to conceive an economy where two R&D sectors evolve without departing significantly from each other in terms of their productive results (society tends to penalize imbalances in technical progress, making negative external effects to appear associated to a sector when this outstands relatively to the other sector; the second sector, in turn, will be subject to positive externalities that reflect a catching up effect). The proposed framework, when associated to a growth setup, is able to replicate the existence of endogenous fluctuations and, therefore, it intends to be a contribution to the literature on endogenous business cycles.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 25 (2008)
Issue (Month): 5 (September)
Pages: 933-945
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Handle: RePEc:eee:ecmode:v:25:y:2008:i:5:p:933-945

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Paper
- Gomes, Orlando, 2006. "Too much of a good thing: endogenous business cycles generated by bounded technological progress," MPRA Paper 2845, University Library of Munich, Germany. [Downloadable!]

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Gomes, Orlando, 2006. "Can social interaction contribute to explain business cycles?," MPRA Paper 2848, University Library of Munich, Germany. [Downloadable!]

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