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Product cycles and growth cycles

Tatsuro Iwaisako () and Hitoshi Tanaka

Journal of International Economics, 2017, vol. 105, issue C, 22-40

Abstract: This paper theoretically shows that shifts in production from developed countries (the North) to developing countries (the South) through imitation by the South can cause endogenous growth cycles. On the equilibrium path, the world economy continues to grow, but innovation, imitation, and the growth rate may permanently fluctuate. To show this, we construct a two-country overlapping generations model where the North develops new goods and the South imitates these goods endogenously. A key assumption is international knowledge spillover in the imitation process. The model implies that growth cycles tend to emerge when imitation in the South is more active.

Keywords: Product cycles; Imitation; Endogenous cycles; Intellectual property rights protection (search for similar items in EconPapers)
JEL-codes: E32 O33 O34 O40 (search for similar items in EconPapers)
Date: 2017
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