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Heterogeneous Researchers in a Two-Sector Representative Consumer Economy

Listed author(s):
  • Orlando Gomes

    (Escola Superior de Comunicação Social)

Research activities have uncertain outcomes. The question asked in this paper is whether or not this uncertainty can be a central piece on the explanation of long run consumption growth paths. More specifically, we inquire how the existence of different research projects, with different degrees of uncertainty, contribute to unpredictable consumption growth paths. The proposed scenario is a two-sector representative consumer model with researchers that invest in different innovation projects. There is heterogeneity in terms of risk associated to research programs (researchers invest in projects with the same expected outcome but different volatility). This difference in volatility, combined with an adaptive learning – bounded rationality rule, implies an aggregate index of technology and a consumption growth rate that do not present a predictable pattern over time.

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File URL: http://econwpa.repec.org/eps/ge/papers/0409/0409009.pdf
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Paper provided by EconWPA in its series GE, Growth, Math methods with number 0409009.

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Length: 30 pages
Date of creation: 28 Sep 2004
Handle: RePEc:wpa:wuwpge:0409009
Note: Type of Document - pdf; pages: 30
Contact details of provider: Web page: http://econwpa.repec.org

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