Obsolescence and modernization in the growth process
(2005) Journal of Development Economics — Vol. 77, n° 1, p. 153-171 (2005)
Files
No attached file found for this publication.
Details
- Authors
- Abstract
- In this paper, an endogenous growth model is built up incorporating Schumpeterian creative destruction and embodied technological progress. Under embodiment, long run growth is affected by two opposite effects: (i) obsolescence costs add to the user cost of capital, which have a negative effect on research efforts; and (ii) the modernization of capital increases the demand for investment goods, raising the incentives to undertake research activities. Applied to the understanding of the growth enhancing role of both capital and R&D subsidies, we conclude that the positive effect of modernization generally more than compensates the negative effect of obsolescence.
- Affiliations
Universidade de Santiago de Compostela European University Institute
Citations
Boucekkine, R., del Rio, F., & Licandro-Goldaracena, O. (2005). Obsolescence and modernization in the growth process. Journal of Development Economics, 77(1), 153-171. https://doi.org/10.1016/j.jdeveco.2004.03.004 (Original work published 2005)