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

Daniel Schiess () and Roger Wehrli ()
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Daniel Schiess: CER-ETH - Center of Economic Research at ETH Zurich, Switzerland
Roger Wehrli: CER-ETH Center of Economic Research at ETH Zurich, Switzerland

No 08/81, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: This paper presents a Schumpeterian quality-ladder model incorporating the impact of new General Purpose Technologies (GPTs). GPTs are breakthrough technologies with a wide range of applications, opening up new innovational complementarities. In contrast to most existing models which focus on the events after the arrival of a new GPT, the model developed in this paper focuses on the events before the arrival if R&D firms know the point of time and the technological impact of this drastic innovation. In this framework we can show, that the economy goes through three main phases: First, the economy is in its old steady state. Second, there are transitional dynamics and finally, the economy is in a new steady state with higher growth rates. The transitional dynamics are characterized by oscillating cycles. Shortly before the arrival of a new GPT, there is an increase in R&D activities and growth going even beyond the old steady state levels and immediately before the arrival of the new GPT, there is a large slump in R&D activities using the old GPT.

Keywords: Schumpeterian growth; research and development; general purpose technologies (search for similar items in EconPapers)
JEL-codes: O11 O33 O41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2008-02
New Economics Papers: this item is included in nep-ino, nep-ipr and nep-pr~
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Citations: View citations in EconPapers (3)

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