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Endogenous innovation waves and economic growth

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  • Andergassen, Rainer
  • Nardini, Franco

Abstract

We propose a simple model where large innovation waves arise from the endogenous propagation of information around sectors. Innovators of each sector invest in internal R&D and in local search for information. We show that depending on the structural parameters of the single sectors, some of the R&D sectors will engage in local search while others will not. Through localised search for information, technology adopted in certain sectors can be adopted also in other sectors, leading to a large technological correlation, and eventually to long ranged innovation waves. We characterise the endogenous balanced growth path of the economy, and the short run fluctuations around it. The model predicts a linear, positive relationship between the short run fluctuations and the long run growth rate. We test this latter relationship and find that we cannot reject the predictions of the model.
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  • Andergassen, Rainer & Nardini, Franco, 2005. "Endogenous innovation waves and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 16(4), pages 522-539, December.
    • Handle: RePEc:eee:streco:v:16:y:2005:i:4:p:522-539
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    Cited by:

    1. Ungureanu Mihai Dragos & Stoian Florin Bogdan & Ionescu George Horia & Vilag Ruxandra Dana, 2009. "Assesing The Implementation Of Real Convergence In Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 472-477, May.
    2. Danny García, 2007. "Innovation and Growth: A Survey of the Literature and a Case Study for Latin America," Revista Ecos de Economía, Universidad EAFIT, October.
    3. Flavio Toxvaerd, 2005. "Record Breaking and Temporal Clustering," Discussion Paper Series dp395, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    4. R. Andergassen & F. Nardini & M. Ricottilli, 2003. "Technological Paradigms and Firms' Interaction," Working Papers 472, Dipartimento Scienze Economiche, Universita' di Bologna.

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