ICT as Technical Change in the Matching and Production Functions of a Pissarides-Dixit-Stiglitz model

Thomas Ziesemer ()

No 24, Research Memorandum from Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT)

Abstract: In this paper we integrate two workhorse models in economics: The monopolistic competition model of Dixit and Stiglitz and the search unemployment model of Pissarides. Information and communication technology (ICT) is interpreted as i) technical progress in the matching function of the Pissarides labour market search model where it is increasing the probability of filling a vacancy, and ii) as technical change in the production function of the Dixit-Stiglitz goods market model where it is increasing fixed costs and decreasing variable costs. All effects together, modelled as a permanent once-and-for-all ICT shock, increase the vacancy/ unemployment ratio, decrease the long-run equilibrium unemployment rate, and increase wages.

Keywords: economics of technology (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Information and Communication Technology as Technical Change in Matching and Production (2003)
Working Paper: ICT as Technical Change in the Matching and Production Functions of a Pissarides-Dixit-Stiglitz model (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:umamer:2001024

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