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Uncertain Technological Change under Capital Mobility

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  • Paul A. de Hek

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Abstract

The analysis in this paper shows that unpredictable variations in economic productivity may have a positive or negative effect on the average growth rate of output. This theoretical ambiguity result is not solely determined by the value of the elasticity of intertemporal substitution (of consumption) - as is the case in earlier analyses - but depends on two factors. That is, the growth-uncertainty relationship depends on whether returns to scale in knowledge creation are increasing or non-increasing and whether the elasticity of intertemporal substitution (of profits) is higher or lower than some critical value. Empirical studies concerning these two factors indicate that unpredictable variations in economic productivity have a negative effect on the average long-run growth rate.

Suggested Citation

  • Paul A. de Hek, 2005. "Uncertain Technological Change under Capital Mobility," Tinbergen Institute Discussion Papers 05-033/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050033
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    References listed on IDEAS

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    Cited by:

    1. Ragchaasuren Galindev, 2008. "Uncertainty, Learning And Growth," Manchester School, University of Manchester, vol. 76(5), pages 539-548, September.

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    More about this item

    Keywords

    Long-run growth; Technological change; Uncertainty;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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