Endogenous Growth, Backstop Technology Adoption and Optimal Jumps
Abstract
We study a two-phase endogenous growth model in which the adoption of a backstop technology (e.g. solar) yields a sustained supply of essential energy inputs previously obtained from exhaustible resources (e.g. oil). Growth is knowledge-driven and the optimal timing of technology switching is determined by welfare maximization. The optimal path exhibits discrete jumps in endogenous variables: technology switching implies sudden reductions in consumption and output, an increase in the growth rate, and instantaneous adjustments in saving rates. Due to the positive growth e¤ect, it is optimal to implement the new technology when its current consumption bene.ts are substantially lower than those generated by old technologies.Download Info
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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 09/104.Length: 31 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:eth:wpswif:09-104
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Related research
Keywords: Backstop technology; Discrete jumps; Endogenous growth; Exhaustible resources; Optimal Control;Other versions of this item:
- Valente, Simone, 2011. "Endogenous Growth, Backstop Technology Adoption, And Optimal Jumps," Macroeconomic Dynamics, Cambridge University Press, vol. 15(03), pages 293-325, June.
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-07 (All new papers)
- NEP-CSE-2009-03-07 (Economics of Strategic Management)
- NEP-DGE-2009-03-07 (Dynamic General Equilibrium)
- NEP-ENE-2009-03-07 (Energy Economics)
- NEP-ENV-2009-03-07 (Environmental Economics)
- NEP-FDG-2009-03-07 (Financial Development & Growth)
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Citations
Blog mentions
As found by EconAcademics.org, the blog aggregator for Economics research:- Should we adopt solar energy before it is more efficient than fuel energy?
by Economic Logician in Economic Logic on 2009-03-12 18:00:00
Cited by:
- Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2012.
"Optimal Regime Switching and Threshold Effects: Theory and Application to a Resource Extraction Problem under Irreversibility,"
Working Papers
halshs-00793200, HAL.
- Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2012. "Optimal Regime Switching and Threshold Effects. Theory and Application to a Resource Extraction Problem under Irreversibility," AMSE Working Papers 1213, Aix-Marseille School of Economics, Marseille, France.
- Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2012. "Optimal regime switching and threshold effects: theory and application to a resource extraction problem under irreversibility," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 12.02, Université de Lausanne, Faculté des HEC, DEEP.
- Raouf Boucekkine & Aude Pommeret & Fabien Prieur, 2012. "Optimal Regime Switching and Threshold Effects: Theory and Application to a Resource Extraction Problem under Irreversibility," Working Papers 12-14, LAMETA, Universtiy of Montpellier, revised May 2012.
- Balistreri, Edward J. & Hillberry, Russell H. & Rutherford, Thomas F., 2010.
"Trade and welfare: Does industrial organization matter?,"
Economics Letters,
Elsevier, vol. 109(2), pages 85-87, November.
- Edward J. Balistreri & Russell H. Hillberry & Thomas F. Rutherford, 2009. "Trade and Welfare: Does Industrial Organization Matter?," CER-ETH Economics working paper series 09/119, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Ngo Van Long & Fabien Prieur & Klarizze Puzon & Mabel Tidball, 2013. "Markov Perfect Equilibria in Differential Games with Regime Switching," Working Papers 13-06, LAMETA, Universtiy of Montpellier, revised Mar 2013.
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