Endogenous Innovation Waves and Economic Growth

Rainer Andergassen and Franco Nardini

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We propose a simple model where large innovation waves arise from the endogenous propagation of information around sectors. Innovators of each sector invest in internal R&D and in local search for information. We show that depending on the structural parameters of the single sectors, some of the R&D sectors will engage in local search while others will not. Through localised search for information, technology adopted in certain sectors can be adopted also in other sectors, leading to a large technological correlation, and eventually to long ranged innovation waves. We characterise the endogenous balanced growth path of the economy, and the short run fluctuations around it. The model predicts a linear, positive relationship between the short run fluctuations and the long run growth rate. We test this latter relationship and find that we cannot reject the predictions of the model.

Date: 2002
New Economics Papers: this item is included in nep-ino
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Citations: View citations in EconPapers (2)

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Journal Article: Endogenous innovation waves and economic growth (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:446

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