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 language | English |
|---|---|
| Pages (from-to) | 905-923 |
| Number of pages | 19 |
| Journal | Journal of Economic Dynamics and Control |
| Volume | 20 |
| Issue number | 5 |
| DOIs | |
| Publication status | Published - 1 Jan 1996 |
| Externally published | Yes |
Keywords
- Endogenous cycles
- Endogenous growth
- New products
- Schumpeter
- Technological change