Capitalism from a Schumpeterian Perspective as a Basic Stochastic Process

P. Buckholtz, John M. Hartwick, B. Madill and M.T. Wasan

Working Papers from Queen's University, Department of Economics

Abstract: Risk is inherent in the investment process. The investor has no guarantee that a productive opportunity will be realized, that a potential product will find a market niche or a potential technique will lead to the production of a product with a market niche. We build an economy-wide model of this notion as a basic stochastic branching process. Sample histories are generated yielding limiting long run wealth distributions. Inspiration is drawn from Schumpeter's idea of "creative destruction".

Date: Written

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Persistent link: http://EconPapers.repec.org/RePEc:qed:wpaper:471

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