On the Long run Determinants of Industry TFP Growth Rates

L. Rachel Ngai and Roberto Samaniego ()

No 6408, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology. In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge -- particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead "spills over" from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.

Keywords: Multi-sector growth; R&d intensity; Technological opportunity; Total factor productivity (search for similar items in EconPapers)
JEL-codes: D24 O31 O41 O47 (search for similar items in EconPapers)
Date: 2007-07
New Economics Papers: this item is included in nep-cse, nep-eff, nep-ino and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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