Animal Spirits Meets Creative Destruction
AbstractWe show how a Schumpeterian process of creative destruction can induce coordination in the timing of entrepreneurial activities across diverse sectors of the economy.Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process.The cyclical equilibrium that we study has a higher long-run growth rate but lower welfare than the corresponding acyclical one.We find that the cycles generated by our model share some features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2001-36.
Date of creation: 2001
Date of revision:
Contact details of provider:
Web page: http://center.uvt.nl
economic growth; entrepreneurship; innovation; business cycles;
Other versions of this item:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- E0 - Macroeconomics and Monetary Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-06-22 (All new papers)
- NEP-DEV-2001-06-22 (Development)
- NEP-DGE-2001-06-22 (Dynamic General Equilibrium)
- NEP-PKE-2001-06-22 (Post Keynesian Economics)
- NEP-TID-2001-06-22 (Technology & Industrial Dynamics)
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