IDEAS home Printed from https://ideas.repec.org/p/fce/doctra/0823.html
   My bibliography  Save this paper

Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries

Author

Listed:
  • Philippe Aghion
  • Johannes Fedderke
  • Peter Howitt
  • Chandana Kularatne
  • Nicola Viegi

Abstract

We study a Lucas (1978) "fruit-tree" economy under the assumption that agents are Choquet expected utility (CEU) rather than standard expected utility (EU) decision makers. The agents’ non-additive beliefs about the economy’s stochastic dividend payment process may thus express ambiguity attitudes and accommodate violations of Savage’s sure-thing principle as elicited by Ellsberg (1961). As our main formal result we establish the existence of a unique stationary equilibrium price function for the assets in this economy. In order to account for the dynamic inconsistency of CEU decision makers, we thereby use an equilibrium concept that combines the market clearing condition of general equilibrium theory with Bayesian Nash equilibrium. A simple example about the equity premium in our economy with non-additive beliefs illustrates our formal findings.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries," Documents de Travail de l'OFCE 2008-23, Observatoire Francais des Conjonctures Economiques (OFCE).
  • Handle: RePEc:fce:doctra:0823
    as

    Download full text from publisher

    File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2008-23.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.
    2. Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    4. Fedderke, Johannes & Szalontai, Gábor, 2009. "Industry concentration in South African manufacturing industry: Trends and consequences, 1972-96," Economic Modelling, Elsevier, vol. 26(1), pages 241-250, January.
    5. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
    6. Philippe Aghion & Matias Braun & Johannes Fedderke, 2008. "Competition and productivity growth in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 741-768, October.
    7. Lawrence Edwards & Robert Z. Lawrence, 2006. "South African Trade Policy Matters: Trade Performance and Trade Policy," NBER Working Papers 12760, National Bureau of Economic Research, Inc.
    8. Jeffrey Frankel & Ben Smit & Federico Sturzenegger, 2008. "South Africa: Macroeconomic challenges after a decade of success," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 639-677, October.
    9. J. Fedderke & P. Vaze, 2004. "Response To Rangasamy And Harmse: Trade Liberalisation In The 1990s," South African Journal of Economics, Economic Society of South Africa, vol. 72(2), pages 407-412, June.
    10. Johannes Fedderke & Dietmar Naumann, 2011. "An analysis of industry concentration in South African manufacturing, 1972-2001," Applied Economics, Taylor & Francis Journals, vol. 43(22), pages 2919-2939.
    11. Torfinn Harding & Jørn Rattsø, 2005. "The barrier model of productivity growth: South Africa," Discussion Papers 425, Statistics Norway, Research Department.
    12. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-330, April.
    13. Rodrick, Dani, 2006. "Understanding South Africa's Economic Puzzles," Working Paper Series rwp06-039, Harvard University, John F. Kennedy School of Government.
    14. Johannes Fedderke & Chandana Kularatne & Martine Mariotti, 2007. "Mark-up Pricing in South African Industry," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(1), pages 28-69, January.
    15. Lawrence Edwards, 2005. "Has South Africa Liberalised Its Trade?," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 754-775, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Fedderke, Johannes & Szalontai, Gábor, 2009. "Industry concentration in South African manufacturing industry: Trends and consequences, 1972-96," Economic Modelling, Elsevier, vol. 26(1), pages 241-250, January.
    2. Rattsø, Jørn & Stokke, Hildegunn E., 2012. "Trade policy in a growth model with technology gap dynamics and simulations for South Africa," Journal of Economic Dynamics and Control, Elsevier, vol. 36(7), pages 1042-1056.
    3. Fedderke, J.W. & Goldschmidt, M., 2015. "Does massive funding support of researchers work?: Evaluating the impact of the South African research chair funding initiative," Research Policy, Elsevier, vol. 44(2), pages 467-482.
    4. Torfinn Harding & Jørn Rattsø, 2010. "Industrial labour productivities and tariffs in South Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 459-485, July.
    5. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 809-842, December.
    6. Fedderke, Johannes W. & Hill, Andrew J., 2011. "Industry structure and labor market flexibility in the South African manufacturing sector: A time series and panel data approach," Economic Modelling, Elsevier, vol. 28(3), pages 1291-1302, May.
    7. Aleksandra Parteka & Joanna Wolszczak-Derlacz, 2013. "The Impact of Trade Integration with the European Union on Productivity in a Posttransition Economy: The Case of Polish Manufacturing Sectors," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(2), pages 84-104, March.
    8. Jørn Rattsø & Hildegunn E. Stokke, 2009. "Trade barriers to growth in South Africa: Endogenous investment-productivity-trade interaction," DEGIT Conference Papers c014_010, DEGIT, Dynamics, Economic Growth, and International Trade.
    9. Peter Klimek & Ricardo Hausmann & Stefan Thurner, 2011. "Empirical confirmation of creative destruction from world trade data," Papers 1112.2984, arXiv.org.
    10. Fedderke, Johannes & Klitgaard, Robert, 2013. "How Much Do Rights Matter?," World Development, Elsevier, vol. 51(C), pages 187-206.
    11. Jørn Rattsø & Torfinn Harding, 2009. "Looking Abroad, but Lagging Behind: How the World Technology Frontier Affects South Africa," Working Paper Series 10209, Department of Economics, Norwegian University of Science and Technology.
    12. Torfinn Harding & Jørn Rattsø, 2009. "Industrial labor productivities and tariffs in South Africa. Identification based on multilateral liberalization reform," Discussion Papers 585, Statistics Norway, Research Department.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:fce:doctra:0823. 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: (Francesco Saraceno). General contact details of provider: http://edirc.repec.org/data/ofcspfr.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 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.

    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.