IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v105y1995i431p897-915.html
   My bibliography  Save this article

Adaptive Capital, Information Depreciation and Schumpeterian Growth

Author

Listed:
  • 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.

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0013-0133%28199507%29105%3A431%3C897%3AACIDAS%3E2.0.CO%3B2-X&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    2. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    4. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 375-394.
    5. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    6. Bean, Charles R., 1990. "Endogenous growth and the procyclical behaviour of productivity," European Economic Review, Elsevier, vol. 34(2-3), pages 355-363, May.
    7. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 43-61.
    8. Joseph Zeira, 1994. "Informational Cycles," Review of Economic Studies, Oxford University Press, vol. 61(1), pages 31-44.
    9. Backus, David K & Kehoe, Patrick J, 1992. "International Evidence of the Historical Properties of Business Cycles," American Economic Review, American Economic Association, vol. 82(4), pages 864-888, September.
    10. Jones, R. & Newman, G., 1991. "Economic Growth as a Coordination Problem," Discussion Papers dp91-11, Department of Economics, Simon Fraser University.
    11. Jovanovic, Boyan & Rob, Rafael, 1990. "Long Waves and Short Waves: Growth through Intensive and Extensive Search," Econometrica, Econometric Society, vol. 58(6), pages 1391-1409, November.
    12. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    13. Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 477-494.
    14. Beggs, Alan W & Klemperer, Paul, 1992. "Multi-period Competition with Switching Costs," Econometrica, Econometric Society, vol. 60(3), pages 651-666, May.
    15. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-472, June.
    16. Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-1433, September.
    17. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    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. Claudio Michelacci, 1999. "Cross-Sectional Heterogeneity and the Persistence of Aggregate Fluctuations," Working Papers wp1999_9906, CEMFI.
    3. Miguel, E., 2003. "Comment on: Social capital and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 195-198, January.
    4. Routledge, Bryan R. & von Amsberg, Joachim, 2003. "Social capital and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 167-193, January.
    5. 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.
    6. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erik Canton & Harald Uhlig, 1999. "Growth and the cycle: Creative destruction versus entrenchment," Journal of Economics, Springer, vol. 69(3), pages 239-266, October.
    2. Uhlig, H.F.H.V.S. & Canton, E.J.F., 1997. "Growth and the Cycle : Creative Destruction versus Entrenchment," Other publications TiSEM ea1ea4bf-dee0-4bfc-822a-0, Tilburg University, School of Economics and Management.
    3. Esteban Jaimovich, 2021. "Quality growth: from process to product innovation along the path of development," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 761-793, March.
    4. Nowak-Lehmann D., Felicitas, 2000. "Was there endogenous growth in Chile (1960 - 1998)? A test of the AK-model," University of Göttingen Working Papers in Economics 7, University of Goettingen, Department of Economics.
    5. repec:hrv:faseco:30752799 is not listed on IDEAS
    6. Ghosh, Arghya & Kato, Takao & Morita, Hodaka, 2017. "Incremental innovation and competitive pressure in the presence of discrete innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 1-14.
    7. Etro, Federico, 2017. "Research in economics and macroeconomics," Research in Economics, Elsevier, vol. 71(3), pages 373-383.
    8. Nicholas Economides, "undated". "Network Economics with Application to Finance," Financial Networks _004, Economics of Networks.
    9. Blackburn, Keith & Hung, Victor T. Y. & Pozzolo, Alberto F., 2000. "Research, Development and Human Capital Accumulation," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 189-206, April.
    10. Iyigun, Murat, 2006. "Clusters of invention, life cycle of technologies and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 30(4), pages 687-719, April.
    11. Carine Nourry, 2012. "Dasgupta, D.: Modern growth theory," Journal of Economics, Springer, vol. 105(1), pages 97-100, January.
    12. Elvio Accinelli & Juan Gabriel Brida, 2007. "Modelos económicos con múltiples regímenes," Revista de Administración, Finanzas y Economía (Journal of Management, Finance and Economics), Tecnológico de Monterrey, Campus Ciudad de México, vol. 1(2), pages 96-115.
    13. Chen, Been-Lon & Mo, Jie-Ping & Wang, Ping, 2002. "Market frictions, technology adoption and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(11), pages 1927-1954, September.
    14. Toshihiko Mukoyama & Latchezar Popov, 2014. "The Political Economy of Entry Barriers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 383-416, July.
    15. Scott Freeman & Dong-Pyo Hong & Dan Peled, 1999. "Endogenous Cycles and Growth with Indivisible Technological Developments," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(2), pages 402-432, April.
    16. Adriana Di Liberto, 2007. "Convergence and Divergence in Neoclassical Growth Models with Human Capital," Economia politica, Società editrice il Mulino, issue 2, pages 289-322.
    17. Chu, Angus C., 2012. "Global Poverty Reduction And Pareto-Improving Redistribution," Macroeconomic Dynamics, Cambridge University Press, vol. 16(4), pages 605-624, September.
    18. Gianluca Benigno & Luca Fornaro, 2018. "Stagnation Traps," Review of Economic Studies, Oxford University Press, vol. 85(3), pages 1425-1470.
    19. Zakaria Babutsidze & Maurizio Iacopetta, 2016. "Innovation, growth and financial markets," Journal of Evolutionary Economics, Springer, vol. 26(1), pages 1-24, March.
    20. Ozan Hatipoglu, 2007. "Inequality and Growth. Where Are We Headed? A Survey," Working Papers 2007/07, Bogazici University, Department of Economics.
    21. Stephen Redding, 2002. "Path Dependence, Endogenous Innovation, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1215-1248, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:105:y:1995:i:431:p:897-915. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/resssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley-Blackwell Digital Licensing or Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/resssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.