A Schumpeterian Model of Entrepreneurship, Innovation, and Regional Economic Growth
AbstractThe authors provide the first theoretical analysis of a one-sector, discrete-time, Schumpeterian model of growth in a regional economy in which consumers are risk neutral, there is no population growth, monopolistic entrepreneurs produce intermediate goods, and a single consumption good is produced competitively. The authors' analysis generates several new results. In the deterministic model, R&D in time t surely leads to an innovation in time t + 1. In this setting, the authors show that relative to the balanced growth path (BGP) equilibrium, the social planner always allocates more labor to R&D and hence achieves a larger size of innovation and a higher growth rate. Next, in the stochastic model, R&D in time t probabilistically leads to an innovation in time t + 1. In this setting, the authors first define the equilibrium and the steady state BGP allocations. Second, the authors generalize the notion of the steady state and determine the number of unemployed workers. Third, the authors show that the regional economy experiences bursts of unemployment followed by periods of full employment. Finally, the authors show that a decline in the time discount rate increases the average growth rate and the average unemployment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by in its journal International Regional Science Review.
Volume (Year): 35 (2012)
Issue (Month): 3 (July)
Contact details of provider:
Other versions of this item:
- Batabyal, A.A. & Nijkamp, P., 2011. "A Schumpeterian model of entrepreneurship, innovation, and regional economic growth," Serie Research Memoranda 0007, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
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.:
- Heidergott, B. & Leahu, H., 2008. "Differentiability of Product Measures," Serie Research Memoranda 0005, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications).
If references are entirely missing, you can add them using this form.