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Policy Implications of Alternative Economic Paradigms: Some surprises from endogenous technological changes

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Abstract

One of the most neglected issues in modern economics concerns the consequences of technological change that is ubiquitous and endogenous. To address these we need to model technology as more than a scalar value in an aggregate production function, dealing with technological change in its messy micro economic details. This paper illustrates these points by considering the policy implications of some alternative economic theories that treat technology differently. The first section contrasts the policy implications of neoclassical and evolutionary economics with respect to the evaluation of the efficiency of the price system, policies with respect to 'distortions,' policies to discourage monopolies, to encourage economic growth in general, and infant industries and specific technological advances in particular. The second section contrasts New Classical and various versions of Keynesian economics with respect to micro behavioural underpinnings of macro relations, the place of technology as a driving force of economic change, and aggregate demand as both a source of fluctuations and a variable to be manipulated by policy makers.

Suggested Citation

  • Richard G. Lipsey, 2012. "Policy Implications of Alternative Economic Paradigms: Some surprises from endogenous technological changes," Discussion Papers dp12-16, Department of Economics, Simon Fraser University.
  • Handle: RePEc:sfu:sfudps:dp12-16
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    File URL: http://www.sfu.ca/econ-research/RePEc/sfu/sfudps/dp12-16.pdf
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    References listed on IDEAS

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    1. Curtis Eaton, B. & Lipsey, Richard G., 1989. "Product differentiation," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 12, pages 723-768 Elsevier.
    2. Lipsey, Richard G. & Carlaw, Kenneth I. & Bekar, Clifford T., 2005. "Economic Transformations: General Purpose Technologies and Long-Term Economic Growth," OUP Catalogue, Oxford University Press, number 9780199290895.
    3. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
    4. Freeman, Chris & Louca, Francisco, 2002. "As Time Goes By: From the Industrial Revolutions to the Information Revolution," OUP Catalogue, Oxford University Press, number 9780199251056.
    5. Mark Blaug, 2007. "The Fundamental Theorems of Modern Welfare Economics, Historically Contemplated," History of Political Economy, Duke University Press, vol. 39(2), pages 185-207, Summer.
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    Cited by:

    1. Jack Vromen, 2013. "Competition as an evolutionary process: Mark Blaug and evolutionary economics," Chapters,in: Mark Blaug: Rebel with Many Causes, chapter 9, pages 98-124 Edward Elgar Publishing.

    More about this item

    Keywords

    Technological change; Keynesian Economics; New Classical Economics; infant industries; picking winners; aggregate demand; microeconomic underpinnings.;

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • H1 - Public Economics - - Structure and Scope of Government
    • O - Economic Development, Innovation, Technological Change, and Growth

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