Growing Through Cycles

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Growing Through Cycles

Author Info

Matsuyama, Kiminori (Department of Economics, Northwestern University)

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Kiminori Matsuyama

Abstract

This paper presents models of growth, which put the neoclassical and neo-Schumpetarian growth models in a unified framework. In doing so, it is argued that these two views of growth, one based on factor accumulation and the other based on innovation, are complementary in that they may capture different phases of a single growth experience. It is shown that, under an empirically plausible condition, the economy achieves sustainable growth through cycles, perpetually moving back and forth between two phases. One phase is characterized by higher output growth, higher investment, no innovation and a competitive market structure. The other phase is characterized by lower output growth, lower investment, high innovation, and a more monopolistic market structure. Both investment and innovation are essential in sustaining growth indefinitely, and yet the only one of them appears to play a dominant role in each phase.

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Paper provided by Institute for Advanced Studies in its series Economics Series with number 40.

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Length: 35 pages
Date of creation: Dec 1996
Date of revision:
Handle: RePEc:ihs:ihsesp:40

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Other versions of this item:

Article
- Kiminori Matsuyama, 1999. "Growing Through Cycles," Econometrica, Econometric Society, vol. 67(2), pages 335-348, March.
Paper
- Kiminori Matsuyama, 1996. "Growing Through Cycles," Discussion Papers 1203, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
- Matsuyama, K., 1996. "Growing through cycles," DELTA Working Papers 96-18, DELTA (Ecole normale supérieure).

Find related papers by JEL classification:
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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This page was last updated on 2008-8-13.

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