Combining semi-endogenous and fully endogenous growth: A generalization

Cozzi, Guido

doi:10.1016/j.econlet.2017.03.027

Cited by 16 publications

(11 citation statements)

References 15 publications

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“…Equation (19) shows that this result is robust to > 0. 5 Intuitively, as increases, R&D spending R t becomes more important for innovation relative to research labor s t ; consequently, the market-size e¤ect, which determines the value of inventions, becomes more important relative to the scale e¤ect in determining innovation. Proposition 2 summarizes this result.…”

Section: Economic Growthmentioning

confidence: 99%

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Growth: Scale or market-size effects?

Chu

Cozzi

2019

Economics Letters

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Is the supply of researchers or the demand for technologies more important for innovation? The supply of research labor captures a scale e¤ect, whereas the demand from production labor for technologies captures a market-size e¤ect. We …nd that both the scale e¤ect and the market-size e¤ect are important for innovation and their relative importance depends on the relative intensity of lab-equipment R&D and knowledgedriven R&D in the innovation process.

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Section: Economic Growthmentioning

confidence: 99%

“…Under lab-equipment R&D, only the market-size e¤ect matters to innovation. 5 One can apply the approximation ln(X) X 1 to (19) to show that @ =@m and @ =@s 1 . 6 This result is robust to allowing s to be allocated between research s r and production s x .…”

Section: Propositionmentioning

confidence: 99%

Growth: Scale or market-size effects?

Chu

Cozzi

2019

Economics Letters

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“…Jones and Romer () acknowledge that first‐generation and semi‐endogenous models both closely match stylized facts about growth over relatively long periods such as a century. The hybrid models in Cozzi (, ) propose that technological improvement can be caused by both semi‐ and fully‐endogenous components. However, even when growth is minimally caused by the semi‐endogenous element, this factor dominates the long run such that growth is only fully‐endogenous if population growth is negative or shrinking (Cozzi, ).…”

Section: Introductionmentioning

confidence: 99%

“…However, even when growth is minimally caused by the semi‐endogenous element, this factor dominates the long run such that growth is only fully‐endogenous if population growth is negative or shrinking (Cozzi, ). Alternatively, combining semi‐endogenous and Schumpeterian growth using a constant elasticity of substitution aggregator suggests that the dominance of one or the other depends upon whether semi‐endogenous or Schumperterian growth are complements or substitutes (Cozzi, ). This article takes a different approach by recognizing that the proposed solutions to remove the scale effect follow a standard theoretical development pattern for reconciling increasing returns at the firm level and negating their impact in aggregate.…”

Section: Introductionmentioning

confidence: 99%

The Decades‐long Dispute Over Scale Effects in the Theory of Economic Growth

Bond‐Smith

2019

Journal of Economic Surveys

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The so‐called “new growth theory” is characterized by the now Nobel Prize winning insight that ideas are a nonrival input to and output from endogenous investment in innovation. Nonrivalry implies increasing returns to scale, but this also unintentionally creates an empirically disputed scale effect that a growing population implies an ever‐increasing growth rate. Empirical evidence supports fully‐endogenous growth without scale effects, but theoretical issues sustain the decades‐long dispute over exactly how to negate the scale effect. This article surveys theoretical approaches to resolving the scale effect and shows how four generations of endogenous growth theory are defined by the maturing of modeling techniques for constraining increasing returns. The synthesis suggests that the dispute over scale effects is really a narrative about how the powerful application of increasing returns has followed a standard theoretical development pattern. This implies that a fourth generation is now emerging that negates the scale effect while retaining fully‐endogenous growth without relying on assumptions of linearity. Instead, the market response to excessive increasing returns to innovation constrains explosive growth by expanding the market, rather than by a linear assumption. This latest class of endogenous growth models may be the final chapter to resolving the long‐running dispute.

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“…See Cozzi (, ) for a hybrid approach that combines semi‐endogenous growth and fully endogenous growth in a unified framework.…”

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confidence: 99%

Inflation and Innovation in a Schumpeterian Economy with North–South Technology Transfer

Chu¹,

Cozzi²,

Furukawa³

et al. 2018

J of Money Credit Banking

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This study analyzes the cross-country e¤ects of in ‡ation on innovation and international technology transfer via cash-in-advance (CIA) constraints on R&D investment. We consider a scale-invariant North-South quality-ladder model that features innovative R&D in the North and adaptive R&D in the South. We …nd that a higher in ‡ation in the South causes a permanent decrease in the rate of international technology transfer, a permanent increase in the North-South wage gap, and a temporary decrease in the rate of Northern innovation. A higher in ‡ation in the North causes a temporary decrease in the rate of Northern innovation, a permanent decrease in the North-South wage gap, and an ambiguous e¤ect on the rate of international technology transfer depending on the relative size of the two economies. We also calibrate the model to China-US data and …nd that the cross-country welfare e¤ect of in ‡ation is quantitatively signi…cant from the North to the South, but not from the South to the North. Speci…cally, permanently decreasing in ‡ation to achieve the Friedman rule in the US leads to a welfare gain of 3.28% in the US and a welfare gain of 3.31% in China. However, permanently decreasing in ‡ation to achieve the Friedman rule in China leads to much smaller welfare gains of 0.34% in China and 0.17% in the US.JEL classi…cation: O30, O40, E41, F43

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Combining semi-endogenous and fully endogenous growth: A generalization

Cited by 16 publications

References 15 publications

Growth: Scale or market-size effects?

Growth: Scale or market-size effects?

The Decades‐long Dispute Over Scale Effects in the Theory of Economic Growth

Inflation and Innovation in a Schumpeterian Economy with North–South Technology Transfer

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