2002-10-21
Endogenous Technological Change under Uncertainty
Publication
Publication
How does risk or uncertainty in the productivity of research affect the growth rate of the economy? To answer this question, a model of endogenous technological change is used where sustained growth stems from intentional investments in R&D from profit-maximizing firms. The uncertainty arises from the productivity of these investments in R&D. The main result of this analysis is that the relationship between long-run growth and uncertainty (on the productivity of knowledge creation) depends on two main factors - the returns to scale in knowledge creation (increasing or non-increasing) and the value of the elasticity of intertemporal substitution (higher or lower than some critical value).Based on empirical studies on the returns to scale in knowledge creation ("non-increasing") and the value of the elasticity of intertemporal substitution ("higher than the critical value"), we expect a negative relationship between long-run growth and uncertainty regarding the productivity of knowledge creation.
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hdl.handle.net/1765/6814 | |
Tinbergen Institute Discussion Paper Series | |
Organisation | Tinbergen Institute |
de Hek, P. (2002). Endogenous Technological Change under Uncertainty (No. TI 02-047/2). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/6814 |