Uncertain Technological Change under Capital Mobility

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Uncertain Technological Change under Capital Mobility

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Paul A. de Hek () (Faculty of Economics, Erasmus Universiteit Rotterdam)

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Paul de Hek

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.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 05-033/2.

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Date of creation: 01 Apr 2005
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Handle: RePEc:dgr:uvatin:20050033

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Find related papers by JEL classification:
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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Galindev, Ragchaasuren, 2007. "Uncertainty, learning and growth," MPRA Paper 7398, University Library of Munich, Germany, revised Jan 2008. [Downloadable!]
Other versions:
- Ragchaasuren Galindev, 2008. "Uncertainty, Learning And Growth," Manchester School, University of Manchester, vol. 76(5), pages 539-548, 09. [Downloadable!] (restricted)

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