This is a revised version of the second half of the paper ‘Externalities versus Technological Complementarities: a model of GPT-driven sustained growth’ delivered at the conference in honour of the 20th anniversary of Nelson and Winter's Evolutionary Theory of Economic Change, Aalborg Denmark 12–15 June 2001. We are indebted for comments and suggestions to Alvero Pereira, Dieter Ernst, Peter Howitt and Gerald Silverberg, as well as to the members of the Canadian Institute for Advanced Research's Economic Growth and Policy Program, and the participants of the Waikato Growth Workshop sponsored by the Econometric Society Australasian Standing Committee (ESASC) to whom earlier versions of the Aalborg paper were presented. This research was supported by a research grant from the Royal Society of New Zealand's Marsden Fund (grant number UOC 101) and the Canadian Institute for Advanced Research.
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Gpt-Driven, Endogenous Growth†
Article first published online: 23 JAN 2006
DOI: 10.1111/j.1468-0297.2006.01051.x
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How to Cite
Carlaw, K. I. and Lipsey, R. G. (2006), Gpt-Driven, Endogenous Growth. The Economic Journal, 116: 155–174. doi: 10.1111/j.1468-0297.2006.01051.x
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Publication History
- Issue published online: 23 JAN 2006
- Article first published online: 23 JAN 2006
- Submitted: 14 October 2003 Accepted: 13 September 2004
- Abstract
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Seven years after Helpman's (1998) book on general purpose technologies (GPTs), there is a dearth of subsequent models. Early models employed technically complex dynamic optimising techniques which limited further development. We present a model in which sustained growth is driven by a succession of GPTs that is technically simpler than the early models yet captures stylised facts that were omitted from them. Ours has diminishing returns to inputs, and endogenous, incremental technological changes from R&D, interrupted by the occasional introduction of new GPTs. GPTs are themselves developed endogenously with payoffs that are subject to uncertainty in magnitude and timing.