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Heterogeneous Researchers in a Two-Sector Representative Consumer Economy

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  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Abstract

Research activities have uncertain outcomes. The question asked in this paper is whether or not this uncertainty can be a central piece on the explanation of long run consumption growth paths. More specifically, we inquire how the existence of different research projects, with different degrees of uncertainty, contribute to unpredictable consumption growth paths. The proposed scenario is a two-sector representative consumer model with researchers that invest in different innovation projects. There is heterogeneity in terms of risk associated to research programs (researchers invest in projects with the same expected outcome but different volatility). This difference in volatility, combined with an adaptive learning – bounded rationality rule, implies an aggregate index of technology and a consumption growth rate that do not present a predictable pattern over time.

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Bibliographic Info

Paper provided by EconWPA in its series GE, Growth, Math methods with number 0409009.

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Length: 30 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpge:0409009

Note: Type of Document - pdf; pages: 30
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Web page: http://128.118.178.162

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Keywords: Heterogeneous agents; Bounded rationality; Optimal control; Research activities; Volatility and chaos;

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