This paper studies the e¤ects of di¤erent types of research policy on economic growth. We ...nd that while tax incentives to private research, public funding of private projects, and basic research performed at public institutions have unambiguously positive e¤ects on economic growth, performing applied research at public institutions could have negative growth e¤ects. This is due to the large ...

This paper develops a theory of the emergence of modern innovation-driven Schumpeterian growth. It uses a tractable model that yields a closed-form solution, consisting of an S-shaped (i.e., logistic-like) time path of …rm size and a set of equations that express the relevant endogenous variables — GDP, product variety and product quality, consumption, the shares of GDP earned by the factors of...

We consider an overlapping generations model with uncertain lifetime and endogenous growth. Individuals have to choose the length of time devoted to schooling before starting to work. We show that it depends positively on life expectancy but that the positive e ect of a longer life on growth could be o set by a decrease in the participation rate. Dynamics are characterized by a delay di erentia...

In this paper, we generalize the notion of Pareto-efficiency to make it applicable to environments with endogenous populations. Two efficiency concepts are proposed, P-efficiency and A-efficiency. The two concepts differ in how they treat potential agents that are not born. We show that these concepts are closely related to the notion of Pareto-efficiency when fertility is exogenous. We then pr...

The purpose of the paper is to show that, from a growth perspective, government resources can be spent in two different ways. Resources can be allocated to uses which support growth, and to uses which generate growth. We take the provision of health services as an example of the first type of use, and the provision of educational services as an example of the second. This enables us to integrat...

In neoclassical theory, knowledge generates increasing returns – and therefore growth – because it is a public good that can be costlessly reused once created. In fact, however, much knowledge in the economy is actually tacit and not easily transmitted –and thus not an obvious source of increasing returns. Several writers have responded to this alarming circumstances by affirming hopefully that...

We study optimal liquidity management, innovation, and production decisions for a continuum of firms facing financing frictions and the threat of creative destruction. We show that while financing frictions prompt firms to decrease production, they may also spur investment in innovation. We examine which types of firms substitute production for innovation in response to negative operating shock...

Conventional wisdom attributes the severity of mortality in poorer countries to widespread poverty and inadequate living conditions. This paper considers the possibility that persistent poverty may arise, in turn, from a high incidence of mortality. Endogenous mortality risk is introduced in a two-period overlapping generations model: probability of survival from the ̄rst period to the next dep...