(Un)anticipated Technological Change in an Endogenous Growth Model

Bruce Conway, Rina Rosenblatt-Wisch () and Klaus Reiner Schenk-Hoppé ()
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Bruce Conway: University of Illinois at Urbana-Champaign

Studies in Nonlinear Dynamics & Econometrics, 2009, vol. 13, issue 1, pages 1526-1526

Abstract: This paper examines, numerically, the impact of a negative exogenous shock to marginal productivity (such as ecological government regulation that becomes effective at some point in time) in an endogenous finite time growth model with sluggish reallocation of human capital. The policy can be anticipated or unanticipated by the economic agents, and it can also be announced but not implemented. It turns out that these frictions have very strong long-run effects on consumption and output, and on the optimal allocation of capital and labor in particular. The qualitative properties are closely related to those found in homogenous labor models with positive productivity shocks. The numerical optimization method employed here proved very successful in qualitatively similar problems in engineering but has not yet found its way into macroeconomic models of growth.

Keywords: two-sector endogenous growth model; technology shock; frictions; Runge-Kutta parallel-shooting algorithm (search for similar items in EconPapers)
Date: 2009
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Working Paper: (Un)anticipated Technological Change in an Endogenous Growth Model (2004)
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