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The Optimal Control of Technology Choices

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  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Abstract

We may distinguish between two concepts of technology: a theoretical level of technology (that is, a technology possibilities frontier) and a level of technology in practice (that is, ready to use in production technology). Having these two concepts in mind, the paper develops an intertemporal optimization model in which we may control the theoretical knowledge frontier. If one wants to expand this frontier an obstacle arises: the resources devoted to create knowledge are diverted from the implementation of technology to productive uses. There is a trade-off between the two technology variables and we explore such a conflict under an optimal control framework. The paper also develops an application of this framework. An economic growth problem is built by putting together the previously presented setup and a capital accumulation constraint. The result is an endogenous growth model where long run growth depends on the technology choices made by a social planner.

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Bibliographic Info

Paper provided by EconWPA in its series GE, Growth, Math methods with number 0409008.

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Length: 21 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpge:0409008

Note: Type of Document - pdf; pages: 21
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Web page: http://128.118.178.162

Related research

Keywords: Optimal Control; Technology; Economic Growth;

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References

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  13. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
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  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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Cited by:
  1. Orlando Gomes, 2004. "A Second-Order Approximation to Technology Choices," GE, Growth, Math methods 0409007, EconWPA.
  2. Orlando Gomes, 2007. "Space, growth and technology: an integrated dynamic approach," Studies in Economics and Finance, Emerald Group Publishing, vol. 24(4), pages 248-265, September.

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