Technological diversification

Miklós Koren and Silvana Tenreyro

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Economies at early stages of development are frequently shaken by large changes in growth rates, whereas advanced economies tend to experience relatively stable growth rates. To explain this pattern, we propose a model of technological diversification. Production makes use of input-varieties that are subject to imperfectly correlated shocks. Endogenous variety adoption by firms raises average productivity and provides diversification benefits against varietyspecific shocks. Firm-level and aggregate volatility thus decline as a by-product of the development process. We quantitatively assess the model's predictions and find that it can generate patterns of volatility and development consistent with the data.

JEL-codes: D21 D24 E23 O33 O47 (search for similar items in EconPapers)
Date: 2013-02
References: Add references at CitEc
Citations: View citations in EconPapers (37)

Published in American Economic Review, February, 2013, 103(1), pp. 378-414. ISSN: 0002-8282

Downloads: (external link)
http://eprints.lse.ac.uk/46865/ Open access version. (application/pdf)

Related works:
Journal Article: Technological Diversification (2013)
Journal Article: Technological diversification (2007)
Working Paper: Technological Diversification (2007)
Working Paper: Technological Diversification (2007)
Working Paper: Technological diversification (2007)
Working Paper: Technological diversification (2005)
Working Paper: Technological Diversification (2005)
Working Paper: Technological diversification (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:46865

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().