The Cyclical Advancement of Drastic Technologies

Ibrahim Yetkiner (hakan.yetkiner@izmirekonomi.edu.tr), Albert de Vaal and Adriaan van Zon

No FNU-21, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: Drastic technological changes are cyclical because basic R&D is carried on only at times when entrepreneurial profits for incremental technologies of the prevailing technological paradigm fall close to zero. The model is essentially an endogenous technological change framework. Varieties, input to the final good production, are composite goods. Each composite good is produced by a set of intermediaries, outgrowths of basic R&D and applied R&D. The basic intermediate, product of basic R&D, is modeled as in Romer (1990). Complementary intermediates, the outgrowths of applied R&D, do show the property of falling profits. The falling character of profits implies that basic R&D becomes more yielding than applied R&D at certain points in time. Research people switch back and forth between the applied and basic research sectors, creating (endogenous) cycles in the advancement of drastic technologies and economic activity.

Keywords: GPT; growth cycles; basic R&D; applied R&D; economic growth (search for similar items in EconPapers)
JEL-codes: O11 O31 O40 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2003-04, Revised 2003-04
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Working Paper: The cyclical advancement of drastic technologies (2002)
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