Direction and Intensity of Technical Change: a Micro Model
AbstractThis 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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Bibliographic InfoPaper provided by Doctoral School of Economics, Sapienza University of Rome in its series Working Papers with number 4.
Length: 22 pages
Date of creation: Feb 2009
Date of revision:
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Web page: http://phdschool-economics.dse.uniroma1.it/website/
More information through EDIRC
Induced innovation; endogenous growth; direction of technical change;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-07 (All new papers)
- NEP-DGE-2009-03-07 (Dynamic General Equilibrium)
- NEP-EFF-2009-03-07 (Efficiency & Productivity)
- NEP-INO-2009-03-07 (Innovation)
- NEP-KNM-2009-03-07 (Knowledge Management & Knowledge Economy)
- NEP-LAB-2009-03-07 (Labour Economics)
- NEP-MIC-2009-03-07 (Microeconomics)
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