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Direction and intensity of technical change: a micro-founded growth model

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zamparelli, luca

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Abstract

This 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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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10843.

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Date of creation: Feb 2008
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Handle: RePEc:pra:mprapa:10843

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Related research
Keywords: Induced innovation; endogenous growth; direction of technical change;

Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Funk, Peter, 2002. "Induced Innovation Revisited," Economica, London School of Economics and Political Science, vol. 69(273), pages 155-71, February. [Downloadable!] (restricted)
  2. Hellwig, Martin & Irmen, Andreas, 2001. "Endogenous Technical Change in a Competitive Economy," Journal of Economic Theory, Elsevier, vol. 101(1), pages 1-39, November. [Downloadable!] (restricted)
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  3. Nelson H. Barbosa-Filho & Lance Taylor, 2006. "Distributive And Demand Cycles In The Us Economy-A Structuralist Goodwin Model," Metroeconomica, Blackwell Publishing, vol. 57(3), pages 389-411, 07. [Downloadable!] (restricted)
  4. Shah, Anup & Desai, Meghnad, 1981. "Growth Cycles with Induced Technical Change," Economic Journal, Royal Economic Society, vol. 91(364), pages 1006-10, December. [Downloadable!] (restricted)
  5. Emmanuel M. Drandakis & Edmond S. Phelps, 1965. "A Model of Induced Invention, Growth and Distribution," Cowles Foundation Discussion Papers 186, Cowles Foundation, Yale University. [Downloadable!]
  6. Thomas R. Michl, 1999. "Biased Technical Change and the Aggregate Production Function," International Review of Applied Economics, Taylor and Francis Journals, vol. 13(2), pages 193-206, May. [Downloadable!] (restricted)
  7. Gordon, Robert J. & Gordon, Robert J., 1987. "Productivity, wages, and prices inside and outside of manufacturing in the U.S., Japan, and Europe," European Economic Review, Elsevier, vol. 31(3), pages 685-733, April. [Downloadable!] (restricted)
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  8. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Acemoglu, Daron, 2002. "Directed Technical Change," Review of Economic Studies, Blackwell Publishing, vol. 69(4), pages 781-809, October.
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  10. Irmen, Andreas, 2005. "Extensive and intensive growth in a neoclassical framework," Journal of Economic Dynamics and Control, Elsevier, vol. 29(8), pages 1427-1448, August. [Downloadable!] (restricted)
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  11. Foley, Duncan K., 2003. "Endogenous technical change with externalities in a classical growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 167-189, October. [Downloadable!] (restricted)
  12. Bester, Helmut & Petrakis, Emmanuel, 2003. "Wages and productivity growth in a competitive industry," Journal of Economic Theory, Elsevier, vol. 109(1), pages 52-69, March. [Downloadable!] (restricted)
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  13. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May. [Downloadable!] (restricted)
  14. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tavani, Daniele, 2008. "Optimal Induced Innovation and Growth with Congestion of a Limited Natural Resource," MPRA Paper 11525, University Library of Munich, Germany. [Downloadable!]
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