Endogenous Growth, Temporary Equilibrium, and the Direction of Change

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Endogenous Growth, Temporary Equilibrium, and the Direction of Change

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Peter Funk

Abstract

This article studies the long-run direction of technological change in an endogenous growth model. Development is modeled as a sequence of temporary equilibria in an overlapping generations framework. We introduce a concept of `long-run efficient development' which excludes persistent inefficiencies. The concept is much weaker than short-run or long-run Pareto-efficiency and does not depend on our particular model. The main theorem of the article gives conditions on agents' expectations and preferences and on the evolution of innovation possibilities under which equilibrium development, guided by current prices and profit expectations, is long-run efficient.

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Publisher Info
Paper provided by University of Bonn, Germany in its series Discussion Paper Serie A with number 506.

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Length: 34
Date of creation: May 1995
Date of revision:
Handle: RePEc:bon:bonsfa:506

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
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Web page: http://www.bgse.uni-bonn.de/index.php?id=517

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Find related papers by JEL classification:
D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
D60 - Microeconomics - - Welfare Economics - - - General
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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Grossman, Gene M & Helpman, Elhanan, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 557-86, May. [Downloadable!] (restricted)
Other versions:
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- Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
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Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May. [Downloadable!] (restricted)

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