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Note on Idea Diffusion Models with Cohort Structures

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  • Santiago Caicedo

Abstract

In this note I propose two alternative frameworks to study idea diffusion models with cohort structures. Both frameworks fix the Lucas (2009) aggregation mistake while keeping the analytical tractability of the model and its insights. The frameworks differ in their assumptions on the meeting process. I study first a continuous arrival process where agents meet at each point in time, and then a more commonly used Poisson process where meeting opportunities arrive stochastically at some given Poisson rate. I generalize the growth formula in Lucas (2009) and show that both models yield the same growth rate on a balanced growth path. Moreover, I show that the continuous arrival process can be viewed as the limit of Poisson processes where the meeting rate increases but the quality of meetings decreases.

Suggested Citation

  • Santiago Caicedo, 2019. "Note on Idea Diffusion Models with Cohort Structures," Economica, London School of Economics and Political Science, vol. 86(342), pages 396-408, April.
  • Handle: RePEc:bla:econom:v:86:y:2019:i:342:p:396-408
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    File URL: https://doi.org/10.1111/ecca.12273
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    References listed on IDEAS

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    1. Buera, Francisco J. & Oberfield, Ezra, 2015. "The Global Diffusion of Ideas," Working Paper Series WP-2016-13, Federal Reserve Bank of Chicago.
    2. Robert E. Lucas Jr. & Benjamin Moll, 2014. "Knowledge Growth and the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1-51.
    3. Akcigit, Ufuk & Caicedo Soler, Santiago & Miguelez, Ernest & Stantcheva, Stefanie & Sterzi, Valerio, 2018. "Dancing with the Stars: Innovation through Interactions," CEPR Discussion Papers 12819, C.E.P.R. Discussion Papers.
    4. Jess Benhabib & Jesse Perla & Christopher Tonetti, 2017. "Reconciling Models of Diffusion and Innovation: A Theory of the Productivity Distribution and Technology Frontier," NBER Working Papers 23095, National Bureau of Economic Research, Inc.
    5. Erzo G. J. Luttmer, 2012. "Eventually, noise and imitation implies balanced growth," Working Papers 699, Federal Reserve Bank of Minneapolis.
    6. Staley, Mark, 2011. "Growth and the diffusion of ideas," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 470-478.
    7. Francisco Buera, 2014. "The Global Diffusion of Ideas," 2014 Meeting Papers 1099, Society for Economic Dynamics.
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