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The Optimal Control of Technology Choices

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  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Abstract

We may distinguish between two concepts of technology: a theoretical level of technology (that is, a technology possibilities frontier) and a level of technology in practice (that is, ready to use in production technology). Having these two concepts in mind, the paper develops an intertemporal optimization model in which we may control the theoretical knowledge frontier. If one wants to expand this frontier an obstacle arises: the resources devoted to create knowledge are diverted from the implementation of technology to productive uses. There is a trade-off between the two technology variables and we explore such a conflict under an optimal control framework. The paper also develops an application of this framework. An economic growth problem is built by putting together the previously presented setup and a capital accumulation constraint. The result is an endogenous growth model where long run growth depends on the technology choices made by a social planner.

Suggested Citation

  • Orlando Gomes, 2004. "The Optimal Control of Technology Choices," GE, Growth, Math methods 0409008, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpge:0409008
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    References listed on IDEAS

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    Cited by:

    1. Orlando Gomes, 2007. "Space, growth and technology: an integrated dynamic approach," Studies in Economics and Finance, Emerald Group Publishing, vol. 24(4), pages 248-265, October.
    2. Orlando Gomes, 2004. "A Second-Order Approximation to Technology Choices," GE, Growth, Math methods 0409007, University Library of Munich, Germany.

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    More about this item

    Keywords

    Optimal Control; Technology; Economic Growth;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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