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Heterogeneous Researchers in a Two-Sector Representative Consumer Economy

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Author Info
Orlando Gomes (Escola Superior de Comunicação Social)

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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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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
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Handle: RePEc:wpa:wuwpge:0409009

Note: Type of Document - pdf; pages: 30
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Web page: http://129.3.20.41

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

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Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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