Technological Revolutions and Financial Innovations
In this paper, we study the symbiotic relationship between financial innovation and technological innovation. In particular, we construct a theoretical macroeconomic growth model that correspond to the thesis presented in Perez (2002) that all the technological revolutions and their associated development surges since the Industrial Revolution have been both beneficiaries and stimulants of financial development. We explain the microeconomic foundations of the model and present its steady state solution, emphasizing how the growth rate of the economy depends on parameters characterising the R&D and financial sectors. We then analyze the impact of specific types of financial innovations that predominate in each phase of the technological cycle on the optimum allocation of resources in the economy.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia|
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Web page: http://fbe.unimelb.edu.au/economics
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- Paul Romer, 1989.
"Endogenous Technological Change,"
NBER Working Papers
3210, National Bureau of Economic Research, Inc.
- Tufano, Peter, 1989. "Financial innovation and first-mover advantages," Journal of Financial Economics, Elsevier, vol. 25(2), pages 213-240, December.
- King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
- S. Illeris & G. Akehurst, 2002. "Introduction," The Service Industries Journal, Taylor & Francis Journals, vol. 22(1), pages 1-3, January.
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