Endogenous growth with capital in R&D production functions

Fernando Sánchez-Losada

No 2014/306, UB School of Economics Working Papers from University of Barcelona School of Economics

Abstract: In this paper we claim that capital is as important in the production of ideas as in the production of final goods. Hence, we introduce capital in the production of knowledge and discuss the associated problems arising from the public good nature of knowledge. We show that although population growth can affect economic growth, it is not necessary for growth to arise. We derive both the social planner and the decentralized economy growth rates and show the optimal subsidy that decentralizes it. We also show numerically that the effects of population growth on the market growth rate, the optimal growth rate and the optimal subsidy are small. Besides, we find that physical capital is more important for the production of knowledge than for the production of goods.

Keywords: knowledge; public good; growth. (search for similar items in EconPapers)
JEL-codes: O30 O40 O41 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2014
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-ino and nep-knm
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Persistent link: https://EconPapers.repec.org/RePEc:ewp:wpaper:306web

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