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Evolutionary Micro-founded Technical Change and The Kaldor-Verdoorn Law: Estimates from an Artificial World

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  • André Lorentz

Abstract

This paper proposes to identify the micro-level sources for the dynamic increasing returns occurring at an aggregate level. The paper reverts to a micro model of technological change in-line with the evolutionary literature on industrial dynamics. The data generated through numerical simulations are used to identify the sources of increasing returns as measured by the Kaldor-Verdoorn Law. In this respect we also aim to provide some plausible micro-foundations to this Law. The paper shows that: (i) Dynamic increasing returns appear as an emergent property of the model; (ii) micro-characteristics of technical change, as the amplitude and the frequency of changes, as well as selection mechanisms significantly shape these increasing returns.

Suggested Citation

  • André Lorentz, 2009. "Evolutionary Micro-founded Technical Change and The Kaldor-Verdoorn Law: Estimates from an Artificial World," Papers on Economics and Evolution 2009-01, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:esi:evopap:2009-01
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    References listed on IDEAS

    as
    1. Mark Knell, 2004. "Structure Change and the Kaldor-Verdoorn law in the 1990s," Revue d'Économie Industrielle, Programme National Persée, vol. 105(1), pages 71-83.
    2. John McCombie, 2002. "Increasing Returns and the Verdoorn Law from a Kaldorian Perspective," Palgrave Macmillan Books, in: John McCombie & Maurizio Pugno & Bruno Soro (ed.), Productivity Growth and Economic Performance, chapter 4, pages 64-114, Palgrave Macmillan.
    3. Patrick Llerena & André Lorentz, 2004. "Cumulative Causation and Evolutionary Micro-Founded Technical Change. On the Determinants of Growth rate Differences," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1191-1214.
    4. Amendola, Mario & Gaffard, Jean-Luc, 1998. "Out of Equilibrium," OUP Catalogue, Oxford University Press, number 9780198293804, December.
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    Cited by:

    1. Martinho, Vítor João Pereira Domingues, 2011. "The Keynesian theory and the manufactured industry in Portugal," MPRA Paper 33363, University Library of Munich, Germany.

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    More about this item

    Keywords

    Dynamic increasing returns; Kaldor-Verdoorn Law; technical change; evolutionary modelling Length 31 pages;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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