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The Optimal Control of Technology Choices

Orlando Gomes ()

GE, Growth, Math methods from University Library of Munich, Germany

Abstract: We may distinguish between two concepts of technology: a theoretical level of technology (that is, a technology possibilities frontier) and a level of technology in practice (that is, ready to use in production technology). Having these two concepts in mind, the paper develops an intertemporal optimization model in which we may control the theoretical knowledge frontier. If one wants to expand this frontier an obstacle arises: the resources devoted to create knowledge are diverted from the implementation of technology to productive uses. There is a trade-off between the two technology variables and we explore such a conflict under an optimal control framework. The paper also develops an application of this framework. An economic growth problem is built by putting together the previously presented setup and a capital accumulation constraint. The result is an endogenous growth model where long run growth depends on the technology choices made by a social planner.

Keywords: Optimal Control; Technology; Economic Growth (search for similar items in EconPapers)
JEL-codes: O33 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2004-09-28
Note: Type of Document - pdf; pages: 21
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