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Resetting the Innovation Clock: Endogenous Growth through Technological Turnover

Author

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  • Aghion, Philippe
  • Bergeaud, Antonin
  • Boppart, Timo
  • Brouillette, Jean-Félix

Abstract

We propose a model of endogenous economic growth with "weak'' scale effects and diminishing returns to innovation at the micro level. In our model, entrants introduce new technologies through research and incumbents incrementally improve them through development. Over time, further improvement becomes harder such that firms ultimately run out of ideas and exit, paving the way for entrants that discover new technologies with further room for improvement. This turnover gives rise to a continuous stream of (temporary) opportunities for technological improvements that sustain economic growth. In a stationary equilibrium, the growth rate is constant and endogenous to market incentives.

Suggested Citation

  • Aghion, Philippe & Bergeaud, Antonin & Boppart, Timo & Brouillette, Jean-Félix, 2025. "Resetting the Innovation Clock: Endogenous Growth through Technological Turnover," CEPR Discussion Papers 20761, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20761
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    File URL: https://cepr.org/publications/DP20761
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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