What Does the Walrasian Auctioneer Know? Technology Adoption and Financial Innovation
AbstractThis paper proposes the view that financial development and economic growth are linked through the characteristics of technology. Perhaps the most obvious connection between technology and financial innovation emerges through risk-sharing. Technology is modeled as a distribution function over output values. While progress allows higher output values to be attained, it also changes the risk profile faced by economic agents. Technology adoption depends on the ability of the financial sector (the auctioneer) to price the new contingencies, therefore expanding the set of risk-sharing contracts offered to economic agents. The auctioneer is less knowledgeable about new technologies relative to entrepreneurs. As very high skilled entrepreneurs adopt the new technology, the auctioneer gradually learns how to price it. An implication of the analysis is the notion that financial development promotes economic growth only to the extent that it enhances the adoption of new technologies
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2004 Meeting Papers with number 526.
Date of creation: 2004
Date of revision:
Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Financial innovation; Technology adoption; Knowledge;
Find related papers by JEL classification:
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-02 (All new papers)
- NEP-DGE-2004-08-02 (Dynamic General Equilibrium)
- NEP-INO-2004-08-02 (Innovation)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Diego Comin & Bart Hobijn, 2004. "Neoclassical Growth and the Adoption of Technologies," NBER Working Papers 10733, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).
If references are entirely missing, you can add them using this form.