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Science, Diminishing Returns and Long Waves


  • Li, Chol-Won


An endogenous growth model with long waves of growth, underlining the distinction between science and technology, is constructed. Scientific progress accelerates the rate of technological progress, but diminishing returns to technological research decelerates it. This process repeats itself with endogenous clustering of innovations. We show that higher trend (long-run) growth is associated with more frequent waves of economic activity. Moreover, we identify a trade-off between actual and trend growth rates when technological research activities are subsidized. Copyright 2001 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Li, Chol-Won, 2001. "Science, Diminishing Returns and Long Waves," Manchester School, University of Manchester, vol. 69(5), pages 553-573, Special I.
  • Handle: RePEc:bla:manchs:v:69:y:2001:i:5:p:553-73

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    References listed on IDEAS

    1. Diebold, Francis X & Rudebusch, Glenn D, 1992. "Have Postwar Economic Fluctuations Been Stabilized?," American Economic Review, American Economic Association, vol. 82(4), pages 993-1005, September.
    2. Sensier, M. & van Dijk, D.J.C., 2001. "Short-term volatility versus long-term growth: evidence in US macroeconomic time series," Econometric Institute Research Papers EI 2001-11, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    3. Romer, Christina D., 1994. "Remeasuring Business Cycles," The Journal of Economic History, Cambridge University Press, vol. 54(03), pages 573-609, September.
    4. Chauvet, Marcelle, 1998. "An Econometric Characterization of Business Cycle Dynamics with Factor Structure and Regime Switching," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(4), pages 969-996, November.
    5. Olivier Blanchard & John Simon, 2001. "The Long and Large Decline in U.S. Output Volatility," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 135-174.
    6. Koop, Gary & Potter, Simon M., 1998. "Bayes factors and nonlinearity: Evidence from economic time series1," Journal of Econometrics, Elsevier, vol. 88(2), pages 251-281, November.
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    Cited by:

    1. Patrick Francois & Huw Lloyd-Ellis, 2005. "I - Q Cycles," Working Papers 1040, Queen's University, Department of Economics.
    2. Li, Chol-Won, 2000. "Growth and Output Fluctuations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(2), pages 95-113, May.
    3. G. Silverberg, 2007. "Long Waves: Conceptual, Empirical and Modelling Issues," Chapters,in: Elgar Companion to Neo-Schumpeterian Economics, chapter 50 Edward Elgar Publishing.
    4. Kriedel, Norbert, 2006. "Long waves of economic development and the diffusion of general-purpose technologies: The case of railway networks," HWWI Research Papers 1-1, Hamburg Institute of International Economics (HWWI).
    5. Stadler, Manfred, 2013. "Scientific breakthroughs, innovation clusters and stochastic growth cycles," University of Tuebingen Working Papers in Economics and Finance 60, University of Tuebingen, Faculty of Economics and Social Sciences.

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