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Costly Technology Adoption and Capital Accumulation

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  • Aubhik Khan

    (Federal Reserve Bank of Philadelphia)

  • B. Ravikumar

    (University of Iowa)

Abstract

We develop a model of costly technology adoption where the cost is irrecoverable and fixed. Households must decide when to switch from an existing technology to a new, more productive tecnology. Using a recursive approach, we show that there is a unique threshold level of whealth above which households will adopt the new technology and below which they will not. This threshold is independent of preference parameters and depends only on technology parameters. Prior to adoption, households invest at increasing rates, but consumption growth is constant. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.2002.0167
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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 5 (2002)
Issue (Month): 2 (April)
Pages: 489-502

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Handle: RePEc:red:issued:v:5:y:2002:i:2:p:489-502

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References

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Citations

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Cited by:
  1. Olivier Bruno & Cuong Le Van & Benoît Masquin, 2005. "When does a developing country use new technologies ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00197539, HAL.
  2. Aubhik Khan & B. Ravikumar, 2000. "Costly technology adoption and capital accumulation," Working Papers 00-7, Federal Reserve Bank of Philadelphia.
  3. Rupayan Pal, 2009. "Technology Adoption in a Differentiated Duopoly - Cournot versus Bertrand," Microeconomics Working Papers 22388, East Asian Bureau of Economic Research.
  4. Hugo A. Hopenhayn & Galina Vereshchagina, 2003. "Risk Taking by Entrepreneurs," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 500, University of Rochester - Center for Economic Research (RCER).
  5. Mateos-Planas, Xavier, 2000. "Technology adoption with finite horizons," Discussion Paper Series In Economics And Econometrics, Economics Division, School of Social Sciences, University of Southampton 0033, Economics Division, School of Social Sciences, University of Southampton.
  6. Galina Vereshchagina, 2014. "Preferences for Risk in Dynamic Models with Adjustment Costs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(1), pages 86-106, January.
  7. Radhika Lahiri & Shyama Ratnasiri, 2006. "Concerning Inequality, Technology Adoption, and Structural Change," School of Economics and Finance Discussion Papers and Working Papers Series, School of Economics and Finance, Queensland University of Technology 207, School of Economics and Finance, Queensland University of Technology.
  8. repec:hal:journl:halshs-00197539 is not listed on IDEAS
  9. Christoph Görtz & Afrasiab Mirza, 2014. "On the Applicability of Global Approximation Methods for Models with Jump Discontinuities in Policy Functions," CESifo Working Paper Series 4837, CESifo Group Munich.
  10. Maria Cunha-e-Sá & Ana Reis, 2007. "The Optimal Timing of Adoption of a Green Technology," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 36(1), pages 35-55, January.
  11. Yi-Chan Tsai, 2010. "News Shocks and Costly Technology Adoption," 2010 Meeting Papers, Society for Economic Dynamics 567, Society for Economic Dynamics.
  12. Ziv Chinzara & Radhika Lahiri, 2012. "Economic growth and inequality patterns in the presence of costly technology adoption and uncertainty," School of Economics and Finance Discussion Papers and Working Papers Series, School of Economics and Finance, Queensland University of Technology 280, School of Economics and Finance, Queensland University of Technology.

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