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Diffusion Dynamics and Creative Destruction in a Simple Classical Model

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  • David Haas

Abstract

type="main"> The article explores the impact of the diffusion of new methods of production on output and employment growth and income distribution within a Classical one-sector framework. Disequilibrium paths are studied analytically and in terms of simulations. Diffusion by differential growth affects aggregate dynamics through several channels. The analysis reveals the non-steady nature of economic change and shows that the adaptation pattern depends both on the innovation's factor-saving bias and on the extent of the bias, which determines the strength of the selection pressure on non-innovators. The typology of different cases developed shows various aspects of Schumpeter's concept of creative destruction.

Suggested Citation

  • David Haas, 2015. "Diffusion Dynamics and Creative Destruction in a Simple Classical Model," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 638-660, November.
    • Handle: RePEc:bla:metroe:v:66:y:2015:i:4:p:638-660
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    References listed on IDEAS

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    1. Nelson, Richard R & Pack, Howard, 1999. "The Asian Miracle and Modern Growth Theory," Economic Journal, Royal Economic Society, vol. 109(457), pages 416-436, July.
    2. Kurz, Heinz D., 2008. "Innovations and profits: Schumpeter and the classical heritage," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 263-278, July.
    3. Englmann, Frank C, 1992. "Innovation Diffusion, Employment and Wage Policy," Journal of Evolutionary Economics, Springer, vol. 2(3), pages 179-193, October.
    4. Alessandro Caiani & Antoine Godin & Stefano Lucarelli, 2014. "A Stock Flow Consistent Analysis of a Schumpeterian Innovation Economy," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 397-429, July.
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    Cited by:

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    2. David Haas, 2016. "The evolutionary traverse: a causal analysis," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1173-1193, December.

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