Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2002-05-28
Revision-Date: 2002-11-08
Number: 02-047/2
Author-Name: Paul A. de Hek
Author-Email: pdehek@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Title: Endogenous Technological Change under Uncertainty
Abstract: 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.
Classification-JEL: O3.
Keywords: Long-run growth; Technological change; Uncertainty.
File-Url: https://papers.tinbergen.nl/02047.pdf
File-Format: application/pdf
File-Size: 333670 bytes
Handle: RePEc:tin:wpaper:20020047