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Embodied learning by investing and speed of convergence

Author

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  • Ronald Wendner

    () ( Karl-Franzens University of Graz)

  • Christian Groth

    () (University of Copenhagen)

Abstract

Based on a dynamic general equilibrium model we study how the composition of technical progress, along three dimensions, aspects transitional dynamics, with an emphasis on the speed of convergence. The three dimensions are, first, the degree to which technical change is embodied, second, the extent to which an endogenous source, learning, drives productivity advances, and, third, the extent to which the vehicle of learning is gross investment rather than net investment. The analysis shows that the speed of convergence, both ultimately and in a finite distance from the steady state, depends strongly and negatively on the importance of learning in the growth engine and on gross investment being the vehicle of learning rather than net investment. In contrast to a presumption implied by "old growth theory", a rising degree of embodiment in the wake of the computer revolution is not likely to raise the speed of convergence when learning by investing is the driving force of productivity increases.

Suggested Citation

  • Ronald Wendner & Christian Groth, 2012. "Embodied learning by investing and speed of convergence," Graz Economics Papers 2012-04, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2012-04
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    Cited by:

    1. Klarl, Torben, 2016. "Pollution externalities, endogenous health and the speed of convergence in an endogenous growth model," Journal of Macroeconomics, Elsevier, vol. 50(C), pages 98-113.

    More about this item

    Keywords

    Transitional dynamics; Speed of convergence; Learning by investing; Embodied technological progress; Decomposable dynamics;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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