A General Model of Technical Change with an Application to the OECD Countries

Almas Heshmati () and Subal Kumbhakar

No 6004, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In the neoclassical production functions model technical change (TC) is assumed to be exogenous and it is specified as a function of time. However, some exogenous external factors other than time can also affect the rate of TC. In this paper we model TC via a combination of time trend (purely non-economic) and other observable exogenous factors, which we call technology shifters (economic factors). We use several composite technology indices based on appropriate combinations of the external economic factors which are indicators of different aspects of technology. These technology indices are embedded into the production function in such a way that they can complement to different inputs. By estimating the generalized production function, we get estimates of TC which is decomposed TC into a pure time component as well as several producer specific external economic factors. Furthermore, the technology shifters allow for non-neutral and biased shifts in TC. We also consider a simple model in which the technology shifters are aggregated into one single index. The empirical model uses panel data on OECD, accession and enhanced engagement countries observed during 1980-2006.

Keywords: technical change; technology shifter; total factor productivity growth; OECD countries; technology indicator (search for similar items in EconPapers)
JEL-codes: C33 C43 D24 O33 O47 O57 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-10
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Economics of Innovation and New Technology, 2014, 23(1), 25-48.

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Journal Article: A general model of technical change with an application to the OECD countries (2014)
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