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A Second-Order Approximation to Technology Choices

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  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Abstract

Resources used in scientific activities are, as any other, scarce. Hence, the economic system has, in every time moment, to choose how to allocate technological inputs. A technology choices model is developed, where scarce scientific resources are alternatively allocated to basic science activities and to applied technology uses. We find that saddle path stability holds for a not too high intertemporal discount rate. The accomplished result is found for a generic quadratic objective function, that is, for a second-order Taylor series approximation of a felicity function regarding technology development goals.

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Bibliographic Info

Paper provided by EconWPA in its series GE, Growth, Math methods with number 0409007.

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Length: 11 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpge:0409007

Note: Type of Document - pdf; pages: 11
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Web page: http://128.118.178.162

Related research

Keywords: Technology; Optimal control; Transitional dynamics; Saddle- path stability; Taylor-series expansion;

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  1. Pierpaolo Benigno & Michael Woodford, 2003. "Optimal Monetary and Fiscal Policy: A Linear Quadratic Approach," NBER Working Papers 9905, National Bureau of Economic Research, Inc.
  2. Orlando Gomes, 2004. "The Optimal Control of Technology Choices," GE, Growth, Math methods 0409008, EconWPA.
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