Modeling the transition to a new economy: lessons from two technological revolutions

Andrew Atkeson and Patrick Kehoe

No 296, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: Many view the period after the Second Industrial Revolution as a paradigmatic example of a transition to a new economy following a technological revolution and conjecture that this historical experience is useful for understanding other transitions, including that after the Information Technology Revolution. We build a model of diffusion and growth to study transitions. We quantify the learning process in our model using data on the life cycle of U.S. manufacturing plants. This model accounts quantitatively for the productivity paradox, the slow diffusion of new technologies, and the ongoing investment in old technologies after the Second Industrial Revolution. The main lesson from our model for the Information Technology Revolution is that the nature of transition following a technological revolution depends on the historical context: transition and diffusion are slow only if agents have built up through learning a large amount of knowledge about old technologies before the transition begins.

Keywords: technological; innovations (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-pke and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in American Economic Review> (Vol. 97, No. 1, March 2007, pp. 64-88)

Downloads: (external link)
https://www.minneapolisfed.org/research/sr/sr296.pdf Full Text (application/pdf)

Related works:
Journal Article: Modeling the Transition to a New Economy: Lessons from Two Technological Revolutions (2007)
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:fip:fedmsr:296

Access Statistics for this paper

More papers in Staff Report from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Kate Hansel ().