On optimizing progress in a diversified economy
The paper explores how the firm might optimally choose its research and development projects, taking into account both the time path of returns and the discount factor. The dynamic-programming method is used to develop examples and it is shown that under plausible assumptions, the rate of discount has a strong influence on the decision to invest or not. It is argued that static misallocation because of temporary monopoly may be unimportant and that an interest subsidy may be an efficient way to encourage technological progress. Copyright International Atlantic Economic Society 1998
Volume (Year): 26 (1998)
Issue (Month): 1 (March)
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- Aghion, Philippe & Howitt, Peter, 1992.
"A Model of Growth through Creative Destruction,"
Econometric Society, vol. 60(2), pages 323-51, March.
- Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
- Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
- Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
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