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Direction and Intensity of Technical Change: a Micro Model

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Author Info
Luca Zamparelli ()

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Abstract

This paper develops a growth model combining elements of endogenous growth and induced innovation literatures. In a standard induced innovation model firms select at no cost innovations from an innovation possibilities frontier describing the trade-off between increasing capital or labor productivity. The model proposed allows firms to choose not only the direction but also the size of innovation by representing the innovation possibilities through a cost function of capital and labor augmenting innovations. By so doing, it provides a micro-foundation both of the intensity and of the direction of technical change. The policy analysis implies that an increase in subsidies to R&D as opposed to capital accumulation raises per capita steady state growth, employment rate and wage share.

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File URL: http://phdschool-economics.dse.uniroma1.it/website/workingpapers/zamparelliWP4.pdf
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Publisher Info
Paper provided by Doctoral School of Economics, Sapienza University of Rome in its series Working Papers with number 4.

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Length: 22 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:dsc:wpaper:4

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Web page: http://phdschool-economics.dse.uniroma1.it/website/
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Related research
Keywords: Induced innovation; endogenous growth; direction of technical change;

Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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  1. Funk, Peter, 2002. "Induced Innovation Revisited," Economica, London School of Economics and Political Science, vol. 69(273), pages 155-71, February. [Downloadable!] (restricted)
  2. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November. [Downloadable!] (restricted)
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  3. Nelson H. Barbosa-Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy-A Structuralist Goodwin Model," Metroeconomica, Blackwell Publishing, vol. 57(3), pages 389-411, 07. [Downloadable!] (restricted)
  4. Shah, Anup & Desai, Meghnad, 1981. "Growth Cycles with Induced Technical Change," Economic Journal, Royal Economic Society, vol. 91(364), pages 1006-10, December. [Downloadable!] (restricted)
  5. Thomas R. Michl, 1999. "Biased Technical Change and the Aggregate Production Function," International Review of Applied Economics, Taylor and Francis Journals, vol. 13(2), pages 193-206, May. [Downloadable!] (restricted)
  6. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 781-809, October.
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  7. Irmen, Andreas, 2005. "Extensive and intensive growth in a neoclassical framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(8), pages 1427-1448, August. [Downloadable!] (restricted)
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  8. Foley, Duncan K., 2003. "Endogenous technical change with externalities in a classical growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 167-189, October. [Downloadable!] (restricted)
  9. Bester, Helmut & Petrakis, Emmanuel, 2003. "Wages and productivity growth in a competitive industry," Journal of Economic Theory, Elsevier, vol. 109(1), pages 52-69, March. [Downloadable!] (restricted)
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  10. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03. [Downloadable!] (restricted)
    Other versions:
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