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Adaptive Capital, Information Depreciation and Schumpeterian Growth

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  • Jones, Robert
  • Newman, Geoffrey

Abstract

This paper develops a search-theoretic approach to optimal growth where agents anticipate continuing technology advance. When agents require an adaptive search investment to 'match with' any new technology, but when this learning is depreciated at the inception of the next, the authors show that an economy will sustain either an equilibrium with frequent advances, coupled with inefficient matching, or one with exactly the opposite characteristics. The cyclical implication is that the immediate effect of technology adoption is a downturn, not a boom. The model offers a broader representation of Schumpeterian creative destruction while augmenting the human capital foundations of endogenous growth theory. Copyright 1995 by Royal Economic Society.

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  • Jones, Robert & Newman, Geoffrey, 1995. "Adaptive Capital, Information Depreciation and Schumpeterian Growth," Economic Journal, Royal Economic Society, vol. 105(431), pages 897-915, July.
    • Handle: RePEc:ecj:econjl:v:105:y:1995:i:431:p:897-915
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    References listed on IDEAS

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    1. The most obvious source of cyclical asymmetry is not a nominal rigidity
      by David Andolfatto in MacroMania on 2013-12-29 00:02:00

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    1. Michelacci, Claudio, 2004. "Cross-sectional heterogeneity and the persistence of aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 51(7), pages 1321-1352, October.
    2. Miguel, E., 2003. "Comment on: Social capital and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 195-198, January.
    3. Routledge, Bryan R. & von Amsberg, Joachim, 2003. "Social capital and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 167-193, January.
    4. Engelbrecht, Hans-Jurgen, 1997. "A comparison and critical assessment of Porat and Rubin's information economy and Wallis and North's transaction sector1," Information Economics and Policy, Elsevier, vol. 9(4), pages 271-290, December.
    5. Claudio Michelacci, 1999. "Cross-Sectional Heterogeneity and the Persistence of Aggregate Fluctuations," Working Papers wp1999_9906, CEMFI.
    6. Ben Fine, 1998. "Endogenous Growth Theory: A Critical Assessment," Working Papers 80, Department of Economics, SOAS University of London, UK.
    7. Walde, Klaus, 2002. "The economic determinants of technology shocks in a real business cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 1-28, November.

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