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Growth, R&D, and uncertainty

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  • Tsuboi, Mizuki

Abstract

I develop and analytically solve the stochastic Romer model in which the creation of ideas is driven by a stochastic process. I show that higher uncertainty about R&D, through the reallocation effects of resources among sectors, slows down economic growth and deteriorates welfare. The results suggest that persistently high uncertainty tends to severely restrict the scope of sustained income growth.

Suggested Citation

  • Tsuboi, Mizuki, 2020. "Growth, R&D, and uncertainty," Economic Modelling, Elsevier, vol. 87(C), pages 394-400.
    • Handle: RePEc:eee:ecmode:v:87:y:2020:i:c:p:394-400
    DOI: 10.1016/j.econmod.2019.08.012
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    References listed on IDEAS

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    Cited by:

    1. Liao, Zhong-Wei & Shao, Jinghai, 2024. "Stability and mean growth rate of stochastic Solow model driven by jump–diffusion process," Journal of Mathematical Economics, Elsevier, vol. 111(C).

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    More about this item

    Keywords

    R&D; Growth; Welfare; Uncertainty;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • 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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