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The Calm Before the Storm? - Anticipating the Arrival of General Purpose Technologies

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    Abstract

    This paper presents a Schumpeterian quality-ladder model incorporating the impact of new General Purpose Technologies (GPTs). GPTs are breakthrough technologies with a wide range of applications, opening up new innovational complementarities. In contrast to most existing models which focus on the events after the arrival of a new GPT, the model developed in this paper focuses on the events before the arrival if R&D firms know the point of time and the technological impact of this drastic innovation. In this framework we can show, that the economy goes through three main phases: First, the economy is in its old steady state. Second, there are transitional dynamics and finally, the economy is in a new steady state with higher growth rates. The transitional dynamics are characterized by oscillating cycles. Shortly before the arrival of a new GPT, there is an increase in R&D activities and growth going even beyond the old steady state levels and immediately before the arrival of the new GPT, there is a large slump in R&D activities using the old GPT.

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    Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 08/81.

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    Length: 28 pages
    Date of creation: Feb 2008
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    Handle: RePEc:eth:wpswif:08-81

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    Keywords: Schumpeterian growth; research and development; general purpose technologies;

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    16. Sjak Smulders & Lucas Bretschger & Hannes Egli, 2011. "Economic Growth and the Diffusion of Clean Technologies: Explaining Environmental Kuznets Curves," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 49(1), pages 79-99, May.
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    Cited by:
    1. Schaefer, Andreas & Schiess, Daniel & Wehrli, Roger, 2014. "Long-term growth driven by a sequence of general purpose technologies," Economic Modelling, Elsevier, vol. 37(C), pages 23-31.
    2. Daniel Schiess & Roger Wehrli, 2011. "Long-Term Growth Driven by a Sequence of General Purpose Technologies," CER-ETH Economics working paper series 11/148, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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