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An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines

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  • Lucrezia Fanti

    () (Sapienza University of Rome (IT))

Abstract

This paper introduces the classical idea about the so-called `directed' and `induced' technical change (ITC) within a Keynesian demand-side and evolutionary endogenous growth model in order to analyze the interplay among technical change, long-run economic growth and functional income distribution. An ITC process is analyzed within an Agent-Based Stock-Flow Consistent (AB-SFC) model, wherein credit-constrained heterogeneous firms choose both the intensity and the direction of the innovation towards a labor- or capital-saving choice of technique. In the longrun, the model reproduces the so-called `Kaldor stylized facts' (i.e. with a purely labor-saving technical change), however during the transitional phase the model shows a labor-saving/capitalusing innovation pattern, as the aggregate output-capital ratio decreases until it stabilizes in the long-run, as well as declining labor share for long time periods and we can ascribe these evidences mainly to the directed technical change process. In order to stress the e ective role of the innovation bias on the model dynamics, we compare the baseline scenario with a `counterfactual' scenario wherein a `neutral ' technical progress is at work.

Suggested Citation

  • Lucrezia Fanti, 2018. "An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines," Working Papers 3/18, Sapienza University of Rome, DISS.
  • Handle: RePEc:saq:wpaper:3/18
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    References listed on IDEAS

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    Cited by:

    1. Bertani, Filippo & Ponta, Linda & Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2019. "The complexity of the intangible digital economy: an agent-based model," MPRA Paper 97071, University Library of Munich, Germany.
    2. Bertani, Filippo & Ponta, Linda & Raberto, Marco & Teglio, Andrea & Cincotti, Silvano, 2019. "An economy under the digital transformation," MPRA Paper 94205, University Library of Munich, Germany.

    More about this item

    Keywords

    Agent-Based Macroeconomics; Stock-Flow Consistent Models; Induced Technical Change; Directed Innovation; Choice of Techniques; Labor Share; Growth and Distribution.;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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