A multisectoral general equilibrium model of Schumpeterian growth and fluctuations

Leonard K. Cheng*, Elias Dinopoulos

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

16 Citations (Scopus)

Abstract

This paper builds a dynamic multisectoral general equilibrium model of Schumpeterian growth and fluctuations based on the endogenous introduction of new products. The set of technological opportunities determines the degree of product-quality upgrading and consists of breakthroughs and improvements the latter exhibiting diminishing returns. If the degree of diminishing returns to technological improvements is low, then there is no steady-state equilibrium but cycles of breakthroughs and improvements. We analyze two symmetric stable patterns of innovation which generate endogenous cycles and growth. There is a negative correlation between the duration of each cycle and the long-run growth trend.

Original languageEnglish
Pages (from-to)905-923
Number of pages19
JournalJournal of Economic Dynamics and Control
Volume20
Issue number5
DOIs
Publication statusPublished - 1 Jan 1996
Externally publishedYes

Fingerprint

General Equilibrium
Equilibrium Model
Diminishing
Fluctuations
Cycle
Long-run
Innovation
Schumpeterian growth
General equilibrium model

Keywords

  • Endogenous cycles
  • Endogenous growth
  • New products
  • Schumpeter
  • Technological change

Cite this

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abstract = "This paper builds a dynamic multisectoral general equilibrium model of Schumpeterian growth and fluctuations based on the endogenous introduction of new products. The set of technological opportunities determines the degree of product-quality upgrading and consists of breakthroughs and improvements the latter exhibiting diminishing returns. If the degree of diminishing returns to technological improvements is low, then there is no steady-state equilibrium but cycles of breakthroughs and improvements. We analyze two symmetric stable patterns of innovation which generate endogenous cycles and growth. There is a negative correlation between the duration of each cycle and the long-run growth trend.",
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A multisectoral general equilibrium model of Schumpeterian growth and fluctuations. / Cheng, Leonard K.; Dinopoulos, Elias.

In: Journal of Economic Dynamics and Control, Vol. 20, No. 5, 01.01.1996, p. 905-923.

Research output: Journal PublicationsJournal Article (refereed)

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T1 - A multisectoral general equilibrium model of Schumpeterian growth and fluctuations

AU - Cheng, Leonard K.

AU - Dinopoulos, Elias

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N2 - This paper builds a dynamic multisectoral general equilibrium model of Schumpeterian growth and fluctuations based on the endogenous introduction of new products. The set of technological opportunities determines the degree of product-quality upgrading and consists of breakthroughs and improvements the latter exhibiting diminishing returns. If the degree of diminishing returns to technological improvements is low, then there is no steady-state equilibrium but cycles of breakthroughs and improvements. We analyze two symmetric stable patterns of innovation which generate endogenous cycles and growth. There is a negative correlation between the duration of each cycle and the long-run growth trend.

AB - This paper builds a dynamic multisectoral general equilibrium model of Schumpeterian growth and fluctuations based on the endogenous introduction of new products. The set of technological opportunities determines the degree of product-quality upgrading and consists of breakthroughs and improvements the latter exhibiting diminishing returns. If the degree of diminishing returns to technological improvements is low, then there is no steady-state equilibrium but cycles of breakthroughs and improvements. We analyze two symmetric stable patterns of innovation which generate endogenous cycles and growth. There is a negative correlation between the duration of each cycle and the long-run growth trend.

KW - Endogenous cycles

KW - Endogenous growth

KW - New products

KW - Schumpeter

KW - Technological change

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