IDEAS home Printed from https://ideas.repec.org/p/kud/kuiedp/0408.html
   My bibliography  Save this paper

(Un)anticipated Technological Change in an Endogenous Growth Model

Author

Listed:
  • Bruce A. Conway

    (University of Illinois at Urbana-Champaign)

  • Klaus Reiner Schenk-Hoppé

    (Institute of Economics, University of Copenhagen)

Abstract

This paper examines numerically the impact of a negative exogenous shock to marginal productivity (such as ecological government regulation that becomes effective at some point in time) in an endogenous finite-time growth model with sluggish reallocation of human capital. The policy can be anticipated or unanticipated by firms, and it can also be announced but not implemented. It turns out that these frictions have a very strong long-run effect on output, consumption and on the optimal allocation of capital and labor in particular. The qualitative properties relate to homogenous labor models with positive productivity shocks. The problem is thus to maximize a function of a continuous system, where the system is subject to frictions and stepwise changes; for such a problem the application of calculus of variations necessary conditions is problematic. A numerical optimization method, which has had much success on qualitatively similar problems in engineering, has been employed.

Suggested Citation

  • Bruce A. Conway & Klaus Reiner Schenk-Hoppé, 2004. "(Un)anticipated Technological Change in an Endogenous Growth Model," Discussion Papers 04-08, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:0408
    as

    Download full text from publisher

    File URL: http://www.econ.ku.dk/english/research/publications/wp/2004/0408.pdf/
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. anonymous, 1995. "Does the bouncing ball lead to economic growth?," Regional Update, Federal Reserve Bank of Atlanta, issue Jul, pages 1-2,4-6.
    2. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    3. Burkhard Heer, 2000. "Welfare Costs of Inflation in a Dynamic Economy with Search Unemployment and Endogenous Growth," Econometric Society World Congress 2000 Contributed Papers 0478, Econometric Society.
    4. Robert J. Barro & Paul Romer, 1993. "Economic Growth (1992)," NBER Books, National Bureau of Economic Research, Inc, number barr93-1, May.
    5. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    6. Bharat Trehan, 2003. "Productivity shocks and the unemployment rate," Economic Review, Federal Reserve Bank of San Francisco, pages 13-27.
    7. Rodolfo E. Manuelli, 2000. "Technological Change, the Labor Market and the Stock Market," NBER Working Papers 8022, National Bureau of Economic Research, Inc.
    8. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    9. Edmund S. Phelps, 1999. "Behind This Structural Boom: The Role of Asset Valuations," American Economic Review, American Economic Association, vol. 89(2), pages 63-68, May.
    10. Heer, Burkhard, 2003. "Welfare costs of inflation in a dynamic economy with search unemployment," Journal of Economic Dynamics and Control, Elsevier, vol. 28(2), pages 255-272, November.
    11. Teresa Beckham Gramm, 2005. "Costly Factor Reallocation and Reduced Productivity Effects in International Trade," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 822-839, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eric W. Bond & Kathleen Trask & Ping Wang, 2003. "Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1041-1060, August.
    2. Jorge Martinez-Vazquez & Violeta Vulovic & Yongzheng Liu, 2011. "Direct versus Indirect Taxation: Trends, Theory, and Economic Significance," Chapters, in: Emilio Albi & Jorge Martinez-Vazquez (ed.), The Elgar Guide to Tax Systems, chapter 2, Edward Elgar Publishing.
    3. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    4. Victor Court & Pierre-André Jouvet & Frédéric Lantz, 2015. "Endogenous economic growth, EROI, and transition towards renewable energy," Working Papers 1507, Chaire Economie du climat.
    5. Stauvermann Peter, 1997. "Endogenes Wachstum, Fertilität und Sozialversicherung in Entwicklungsländern / Endogenous Growth, Fertility and Social Security," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 216(2), pages 175-193, April.
    6. Xiaokai Yang, 2006. "The Division Of Labor, Investment And Capital," World Scientific Book Chapters, in: Christis Tombazos & Xiaokai Yang (ed.), Inframarginal Contributions To Development Economics, chapter 16, pages 409-436, World Scientific Publishing Co. Pte. Ltd..
    7. Beugelsdijk, S. & Smulders, J.A., 2009. "Bonding and Bridging Social Capital and Economic Growth," Discussion Paper 2009-27, Tilburg University, Center for Economic Research.
    8. Martijn Brons & Henri L.F.M. de Groot & Peter Nijkamp, 1999. "Growth Effects of Fiscal Policies - A Comparative Analysis in a Multi-Country Context," Tinbergen Institute Discussion Papers 99-042/3, Tinbergen Institute.
    9. MARTINS, Ana Paula, 2015. "Increasing Returns And Endogenous Growth: Market Size And Taste For Variety," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(5), pages 3-33, June.
    10. Norman Gemmell, 2001. "Fiscal Policy in a Growth Framework," WIDER Working Paper Series DP2001-84, World Institute for Development Economic Research (UNU-WIDER).
    11. Hounie, Adela, 1999. "ECLAC and the new growth theories," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    12. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Working Papers 96-07, University of Washington, Department of Economics.
    13. Grimaud, André & Tournemaine, Frédéric, 2004. "Funding Research and Educating People in a Growth Model with Increasing Population," IDEI Working Papers 262, Institut d'Économie Industrielle (IDEI), Toulouse.
    14. Uche Boniface Ugwuanyi & Okelue David Ugwunta, 2017. "Fiscal Policy and Economic Growth: An Examination of Selected Countries in Sub-Saharan Africa," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 7(1), pages 117-130, January.
    15. Marie-Ange VEGANZONES-VAROUDAKIS, 2000. "Infrastructures, investissement et croissance : un bilan de dix années de recherches," Working Papers 200007, CERDI.
    16. repec:eee:labchp:v:3:y:1999:i:pc:p:2943-2984 is not listed on IDEAS
    17. repec:zbw:bofrdp:2007_003 is not listed on IDEAS
    18. Kevin S. Nell & Maria M. De Mello, 2015. "Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa," CEF.UP Working Papers 1501, Universidade do Porto, Faculdade de Economia do Porto.
    19. Amal MATALLAH & Amal MATALLAH, 2017. "Does fiscal policy spur economic growth? Empirical evidence from Algeria," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(612), A), pages 125-146, Autumn.
    20. Jhy-Yuan Shieh & Wen-Ya Chang & Ching-Chong Lai, 2007. "An Endogenous Growth Model Of Capital And Arms Accumulation," Defence and Peace Economics, Taylor & Francis Journals, vol. 18(6), pages 557-575.
    21. Canton, E.J.F., 1997. "Fiscal Policy in a Stochastic Model of Endogenous Growth," Discussion Paper 1997-63, Tilburg University, Center for Economic Research.
    22. Warr, Benjamin & Ayres, Robert U., 2012. "Useful work and information as drivers of economic growth," Ecological Economics, Elsevier, vol. 73(C), pages 93-102.

    More about this item

    Keywords

    two-sector endogenous growth model; unanticipated and anticipated technological change; frictions in reallocation of human capital; Runge-Kutta parallel shooting algorithm;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    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:kud:kuiedp:0408. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Hoffmann (email available below). General contact details of provider: https://edirc.repec.org/data/okokudk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.