Factor saving innovation

Michele Boldrin and David Levine

No 301, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We study a simple model of factor saving technological innovation in a concave framework. Capital can be used either to reproduce itself or, at additional cost, to produce a higher quality of capital that requires less labor input. If higher quality capital can be produced quickly, we get a model of exogenous balanced growth as a special case. If, however, higher quality capital can be produced slowly, we get a model of endogenous growth in which the growth rate of the economy and the rate of adoption of new technologies are determined by preferences, technology, and initial conditions. Moreover, in the latter case, the process of growth is necessarily uneven, exhibiting a natural cycle with alternating periods of high and low growth. Growth paths and technological innovations also exhibit dependence upon initial conditions. The model provides a step toward a theory of endogenous innovation under conditions of perfect competition.

Keywords: technological; innovations (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-dge and nep-ino
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Citations: View citations in EconPapers (51)

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Related works:
Journal Article: Factor Saving Innovation (2002)
Working Paper: Factor Saving Innovation (2002)
Working Paper: Factor Saving Innovation (2001)
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