IDEAS home Printed from https://ideas.repec.org/p/atv/wpaper/1903.html
   My bibliography  Save this paper

The implications of automation for economic growth when investment decisions are irreversible

Author

Listed:
  • Jürgen Antony
  • Torben Klarl

Abstract

This paper discusses automation embedded into a standard growth model without exogenous growth when investment decisions for physical and automation capital are irreversible. The imposed nonnegativity constraints on physical and automation capital induces an imbalance effect between the growth rate of output and the fraction between physical and automation capital. The paper shows that this imbalance effect leads (i) to transitional dynamics off the steady state while (ii) retaining perpetual growth of the AK style in the steady state without exogenous technological progress. We also show that the resulting transition path does not have to be on the saddle path of the system without the nonnegativity constraints.

Suggested Citation

  • Jürgen Antony & Torben Klarl, 2019. "The implications of automation for economic growth when investment decisions are irreversible," Bremen Papers on Economics & Innovation 1903, University of Bremen, Faculty of Business Studies and Economics.
    • Handle: RePEc:atv:wpaper:1903
    DOI: https://doi.org/10.26092/elib/209
    as

    Download full text from publisher

    File URL: https://media.suub.uni-bremen.de/bitstream/elib/3572/1/00107733-1.pdf
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.26092/elib/209?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2019. "How can robots affect wage inequality?," Economic Modelling, Elsevier, vol. 81(C), pages 161-169.
    3. Prettner, Klaus, 2019. "A Note On The Implications Of Automation For Economic Growth And The Labor Share," Macroeconomic Dynamics, Cambridge University Press, vol. 23(3), pages 1294-1301, April.
    4. Casey B. Mulligan & Xavier Sala-i-Martin, 1991. "A Note on the Time-Elimination Method For Solving Recursive Dynamic Economic Models," NBER Technical Working Papers 0116, National Bureau of Economic Research, Inc.
    5. Ladron-de-Guevara, Antonio & Ortigueira, Salvador & Santos, Manuel S., 1997. "Equilibrium dynamics in two-sector models of endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 115-143, January.
    6. Prettner Klaus & Geiger Niels & Schwarzer Johannes A., 2018. "Die Auswirkungen der Automatisierung auf Wachstum, Beschäftigung und Ungleichheit," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 19(2), pages 59-77, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David E. Bloom & Klaus Prettner & Jamel Saadaoui & Mario Veruete, 2023. "Artificial intelligence and the skill premium," Papers 2311.09255, arXiv.org.
    2. Abeliansky, Ana Lucia & Prettner, Klaus, 2021. "Population growth and automation density: theory and cross-country evidence," Department of Economics Working Paper Series 315, WU Vienna University of Economics and Business.
    3. Andreas Eder & Wolfgang Koller & Bernhard Mahlberg, 2024. "The contribution of industrial robots to labor productivity growth and economic convergence: a production frontier approach," Journal of Productivity Analysis, Springer, vol. 61(2), pages 157-181, April.
    4. Hayakawa, Kazunobu & Mukunoki, Hiroshi, 2022. "How does additive manufacturing change trade?: evidence from trade in sound recordings," IDE Discussion Papers 848, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. Klarl, Torben, 2022. "Fragile robots, economic growth and convergence," Economic Modelling, Elsevier, vol. 112(C).
    6. Liu, Lei & Li, Tianze & Phan, Quoc & Wu, Zhenyu & Zheng, Steven Xiaofan, 2024. "Automation exposure and operating performance," Finance Research Letters, Elsevier, vol. 65(C).
    7. Prettner, Klaus, 2023. "Stagnant wages in the face of rising labor productivity: The potential role of industrial robots," Finance Research Letters, Elsevier, vol. 58(PD).
    8. Sasaki, Hiroaki, 2023. "Growth with automation capital and declining population," Economics Letters, Elsevier, vol. 222(C).
    9. Abeliansky, Ana Lucia & Prettner, Klaus, 2023. "Automation and population growth: Theory and cross-country evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 345-358.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klarl, Torben, 2022. "Fragile robots, economic growth and convergence," Economic Modelling, Elsevier, vol. 112(C).
    2. Dario Cords & Klaus Prettner, 2022. "Technological unemployment revisited: automation in a search and matching framework [The future of work: meeting the global challenges of demographic change and automation]," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 115-135.
    3. Ana Lucia Abeliansky & Klaus Prettner, 2021. "Population growth and automation density: theory and cross-country evidence," Department of Economics Working Papers wuwp315, Vienna University of Economics and Business, Department of Economics.
    4. Abeliansky, Ana Lucia & Prettner, Klaus, 2017. "Automation and demographic change," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168215, Verein für Socialpolitik / German Economic Association.
    5. Gasteiger, Emanuel & Prettner, Klaus, 2022. "Automation, Stagnation, And The Implications Of A Robot Tax," Macroeconomic Dynamics, Cambridge University Press, vol. 26(1), pages 218-249, January.
    6. Andreas Eder & Wolfgang Koller & Bernhard Mahlberg, 2024. "The contribution of industrial robots to labor productivity growth and economic convergence: a production frontier approach," Journal of Productivity Analysis, Springer, vol. 61(2), pages 157-181, April.
    7. Abeliansky, Ana Lucia & Prettner, Klaus, 2023. "Automation and population growth: Theory and cross-country evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 208(C), pages 345-358.
    8. Martin Labaj & Daniel Dujava, 2019. "Economic growth and convergence during the transition to production using automation capital," Department of Economic Policy Working Paper Series 017, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    9. Sandra M. Leitner & Robert Stehrer, 2019. "The Automatisation Challenge Meets the Demographic Challenge: In Need of Higher Productivity Growth," wiiw Working Papers 171, The Vienna Institute for International Economic Studies, wiiw.
    10. David E. Bloom & Klaus Prettner & Jamel Saadaoui & Mario Veruete, 2023. "Artificial intelligence and the skill premium," Papers 2311.09255, arXiv.org.
    11. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    12. Chen, Simiao & Prettner, Klaus & Kuhn, Michael & Bloom, David E., 2021. "The economic burden of COVID-19 in the United States: Estimates and projections under an infection-based herd immunity approach," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    13. Xiaomeng Zhang & Theodore Palivos & Xiangbo Liu, 2022. "Aging and automation in economies with search frictions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(2), pages 621-642, April.
    14. Prettner, Klaus & Strulik, Holger, 2020. "Innovation, automation, and inequality: Policy challenges in the race against the machine," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 249-265.
    15. von Maydell, Richard, 2024. "Artificial Intelligence and its Effect on Competition and Factor Income Shares," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277654, Verein für Socialpolitik / German Economic Association, revised 2024.
    16. Lankisch, Clemens & Prettner, Klaus & Prskawetz, Alexia, 2019. "How can robots affect wage inequality?," Economic Modelling, Elsevier, vol. 81(C), pages 161-169.
    17. Thomas M. Steger, 2000. "Productive Consumption and Growth in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 365-375, October.
    18. Rod Tyers & Yixiao Zhou, 2023. "Automation and inequality with taxes and transfers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(1), pages 68-100, February.
    19. Yixiao ZHOU & Rod TYERS, 2019. "Implications of Automation for Global Migration," Economics Discussion / Working Papers 19-19, The University of Western Australia, Department of Economics.
    20. Jones, Larry E. & Manuelli, Rodolfo E., 1997. "Endogenous growth theory: An introduction," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 1-22, January.

    More about this item

    Keywords

    Automation; perpetual economic growth; irreversibility of investment decisions;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:atv:wpaper:1903. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Matheus Eduardo Leusin (email available below). General contact details of provider: https://edirc.repec.org/data/iibrede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.