Replacement, adoption and economic dynamics: lessons from a canonical creative destruction model
(2003) Structural Change and Economic Dynamics — Vol. 14, n° 3, p. 339-359 (2003)
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- Authors
- Abstract
- In this paper, we provide a first inspection into how structural technology adoption costs affect economic fluctuations. To this end, we choose a simple extension of a canonical creative destruction model. We analytically characterize the optimal replacement–adoption policies, and study numerically the induced dynamics. Our model predicts that the countries supporting the highest adoption costs are those which display the longest and sharpest business and employment fluctuations, and the lowest convergence speeds to their steady state equilibria. Moreover, as the position of the workers in the labor market weakens, the fluctuations are shown to get even sharper.
- Affiliations
Universidad de Alicante Departamento de Fundamentos del Análisis Económico
Citations
Boucekkine, R., & Martinez, B. (2003). Replacement, adoption and economic dynamics: lessons from a canonical creative destruction model. Structural Change and Economic Dynamics, 14(3), 339-359. https://doi.org/10.1016/S0954-349X(03)00024-9 (Original work published 2003)