On Accounting "Capital" in Horizontal Innovation Models
I identify and correct some logical problems of the 1990 Romer model of horizontal innovation. The model's setting where all the produced inputs are durable is inconsistent with the proposed Dixit-Stiglitz production function; also, Romer's "accounting measure of capital" (and its variants in the literature) is not a theoretically proper measure on which the rate of interest is to be calculated. The correction is straightforward. However, a more fundamental issue is at stake: the structure of horizontal innovation models necessitates consideration of the problem of value, but the current literature deliberately assumes it away, generating internal inconsistency of various forms.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: (82-2) 928-4948
Web page: http://econ.korea.ac.kr/~ri
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gancia, Gino & Zilibotti, Fabrizio, 2005.
"Horizontal Innovation in the Theory of Growth and Development,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 3, pages 111-170
- Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal Innovation in the Theory of Growth and Development," Working Papers 200, Barcelona Graduate School of Economics.
- Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal innovation in the theory of growth and development," Economics Working Papers 831, Department of Economics and Business, Universitat Pompeu Fabra.
When requesting a correction, please mention this item's handle: RePEc:iek:wpaper:0727. 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: (Kim, Jisoo)
If references are entirely missing, you can add them using this form.