A Second-Order Approximation to Technology Choices

Orlando Gomes ()

GE, Growth, Math methods from EconWPA

Abstract: Resources used in scientific activities are, as any other, scarce. Hence, the economic system has, in every time moment, to choose how to allocate technological inputs. A technology choices model is developed, where scarce scientific resources are alternatively allocated to basic science activities and to applied technology uses. We find that saddle path stability holds for a not too high intertemporal discount rate. The accomplished result is found for a generic quadratic objective function, that is, for a second-order Taylor series approximation of a felicity function regarding technology development goals.

Keywords: Technology; Optimal control; Transitional dynamics; Saddle- path stability; Taylor-series expansion (search for similar items in EconPapers)
JEL-codes: C61 O33 (search for similar items in EconPapers)
Date: 2004-09-28
Note: Type of Document - pdf; pages: 11
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpge:0409007

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