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Crawford PhD Conference 2014
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Technological expansion and thefuture of (US) growth
Akshay Shanker
November 18, 2014
Big questions
I Productivity growth slowed before GFC (J.Fernald, 2014)
I Permanent or cyclical reasons?
I Future of growth?
Stagnation from technological expansion
Main idea
I Growth means exploring new tech.
I R&D workers spread more thinly accross moredifferent technologies
I Growth slows without growth in human capital
Road map
I Review growth theory
I Theoretical overview of model
I Simulations, policy
TFP growth
Growth in R
Endogenous growth theory
Production
I Measure of varieties
Y =
N∫0
A (i) di = NA
I Product quality
Endogenous growth theory
Production
I Measure of varieties
Y =
N∫0
A (i) di = NA
I Product quality
Endogenous growth theory 1
Romer (1990), Aghion and Howitt (1992)
I Standing on shoulders
•N = N R
I Research effort (nerds)
I gY = R but R is growing in data
Endogenous growth theory 1
Romer (1990), Aghion and Howitt (1992)
I Standing on shoulders
•N = N R
I Research effort (nerds)
I gY = R but R is growing in data
Endogenous growth theory 1
Romer (1990), Aghion and Howitt (1992)
I Standing on shoulders
•N = N R
I Research effort (nerds)
I gY = R but R is growing in data
Endogenous growth theory 2
I Aghion and Howitt (1999)/ neo-schumpeterian
•A = A
RN
=RL
I Expansion of sectors (N ∝ L)
I gY =RL
butRL
is growing
Endogenous growth theory 2
I Aghion and Howitt (1999)/ neo-schumpeterian
•A = A
RN
=RL
I Expansion of sectors (N ∝ L)
I gY =RL
butRL
is growing
Endogenous growth theory 3
I Jones (1995)/ semi-endogenous growth
•N = NφR φ ∈ (0, 1)
I gY = gR but 90s IT boom?
I interpretation of φ < 1? (Madsen, 2006)
Endogenous growth theory 3
I Jones (1995)/ semi-endogenous growth
•N = NφR φ ∈ (0, 1)
I gY = gR but 90s IT boom?
I interpretation of φ < 1? (Madsen, 2006)
Technological differentiation
Technologies not the same
Y =∫ N
0(δ (i) A (i))
σ−1σ di
σσ−1
I Each sector•
A (i) = R (i) A (i)
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Technological differenentionsh
are
infi
nal
goo
d
X X X
Wheat IT Medical devices
Equilibrium
I Profitability to do R&D and enter market
depends on marginal product Y (a)1σ a (i)
−1σ
I General equilibrium– research goes to the mostprofitable sectors first
I Researchers go to work in other sectors asprofitability goes up (not L growth)
Simulation
Summary
I Stagnation but not becuase we are running outof things to discover
Policy implications
I Growth possible
I Increase research intensity
I Fertility, labour force participation
I Change the direction of tech. change to highgrowth sectors
Caveat
I Environment, social-political-institutional, trade,dodgy banks all matter
I Issues: spillovers, parameterisation, no closedform equations
I Sector size inequality
..the future of growth
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