Implementing Technology

Diego Comin and Bart Hobijn

No 12886, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We introduce a tractable model of endogenous growth in which the returns to innovation are determined by the technology adoption decisions of the users of new technologies. Technology adoption involves an implementation investment that determines the initial productivity of a new technology. After implementation, learning increases the productivity of a technology to its full potential. In this framework, implementation enhances growth, while growth increases obsolescence and reduces implementation. In a calibrated version of our model, the optimal policy involves a subsidy to capital and to implementation and a R&D tax. This policy would lead to a welfare improvement of 7.6 percent. Out of steady-state analysis yields that the transitional dynamics of the detrended variables after a shock to capital are very similar to the dynamics of the neoclassical growth model, but transitory shocks have permanent effects on the level of productivity.

JEL-codes: O1 O3 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-dev, nep-dge, nep-ino, nep-ipr and nep-pr~
Note: EFG PR
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Citations: View citations in EconPapers (15)

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