The Calm Before the Storm? Anticipating The Arrival of General Purpose Technologies

Abstract

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Long-term growth driven by a sequence of general purpose technologies

“…Taking the Internet as an example, its invention would not have been possible without a multitude of previous inventions ranging from the computer to electricity. We achieve in modelling these stylized facts by extending our own model of Schumpeterian growth and GPTs, as presented in Schiess and Wehrli (2008). While in our previous model long term growth is driven by exogenously arriving new GPTs, we now endogenize the arrival of new GPTs.…”

“…We present a Schumpeterian model of long-term growth in a quality-ladder framework which is a discrete-time version of the model presented in Schiess and Wehrli (2008): 6 Our model has a unique combination of features: On one hand, it focuses on the long-term evolution of the economy. On the other hand, we endogenize the arrival of new GPTs, whereby the probability of discovering a new GPT positively depends on the currently available stock of applied knowledge.…”