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Too Much of a Good Thing? The Quantitative Economics of R&D–driven Growth Revisited

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  • Holger Strulik

    (Department of Economics, University of Copenhagen)

Abstract

This paper augments an R&D-based growth model of the third generation with human capital accumulation and impure altruism, calibrates it with U.S. data, and investigates whether the market provides too little or too much R&D. For benchmark parameters the market share of employment in R&D is close to the socially optimal allocation. Sensitivity analysis shows that the order of magnitude of possible deviation between market allocation and optimal R&D is also smaller than suggested by previous studies. Furthermore, the model allows for two additional channels through which population growth may affect the resource allocation so that its overall economic impact is no longer predetermined as being positive. Numerical calibrations show that economic growth at the U.S. average rate during the last century can be consistent with a small and probably negative partial correlation between population growth and economic growth.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 05-26.

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Length: 15 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:kud:kuiedp:0526

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Related research

Keywords: human capital; population growth; endogenous economic growth; R&D-spillovers;

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References

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  1. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  2. Nerlove, Marc & Razin, Assaf & Sadka, Efraim, 1982. "Population size and the social welfare functions of Bentham and Mill," Economics Letters, Elsevier, Elsevier, vol. 10(1-2), pages 61-64.
  3. Diego Comin, 2003. "R&D? A Small Contribution to Productivity Growth," Macroeconomics, EconWPA 0306007, EconWPA.
  4. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, American Economic Association, vol. 88(5), pages 1290-1310, December.
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  14. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, National Bureau of Economic Research, Inc, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  15. Charles I. Jones & John C. Williams, 1998. "Measuring The Social Return To R&D," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1119-1135, November.
  16. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number minc74-1.
  17. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  18. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(4), pages 759-84, August.
  19. Thomas M. Steger, 2005. "Welfare Implications of Non-scale R&D-based Growth Models," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 107(4), pages 737-757, December.
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