The dynamics of structural change under risk influence
The paper is concerned with structural change in the growth process and the role of uncertainty. Uncertainty is conceived as the means of removing the obstacles of growth through the activation of knightian entrepreneurship. A dynamic stochastic model of continuous-time growth is proposed. The paper concludes that uncertainty affects economic growth and the rate of returns, and causes structural changes in portfolio shares of the two types of entrepreneurial events. Structural change depends mainly on intertemporal rate of substitution, productivity ratios, and finally intersectoral difference in return and risk.
Volume (Year): 15 (2005)
Issue (Month): 7 ()
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