This paper assumes that a subjective discount factor is affected by an average level of investment in future-oriented resources in an economy (investment externalities) in addition to a level of individual investment in future-oriented resources. Under this assumption, this paper considers a maximization problem formulated as a pseudo planning problem and shows the conditions under which equili...

This paper presents, within a framework of the Solow model, evidence that there should be two different reasons for convergence. One is due to diminishing returns to capital and the other is due to technological diffusion. This paper shows that OECD and low income countries follow a pattern of conditional convergence but middle income countries do not. This seems to imply that technological dif...

Rising educational attainment and research intensity in recent decades suggest that the U.S. economy is far from its steady state. This paper develops a model reconciling these facts with the stability of U.S. growth rates. In the model, long-run growth arises from the worldwide discovery of ideas, which depends on population growth. Nevertheless, constant growth can temporarily proceed at a fa...

This research examines whether technology transfer, research intensity, educational attainment and the ability to absorb foreign technology help explain cross-country differences in productivity growth. Our data comprise a panel of 55 countries including 23 OECD and 32 developing economies over the period 1970-2004. The results show that TFP growth in both OECD and developing countries is posit...

This paper presents, within a framework of the Solow model, evidence that there should be two different reasons for convergence. One is due to diminishing returns to capital and the other is due to technological diffusion. This paper shows that OECD and low income countries follow a pattern of conditional convergence but middle income countries do not. This seems to imply that technological dif...

Disease and Development Revisited Acemoglu and Johnson (2007) present evidence that improvements in population health do not promote economic growth. We show that their result depends critically on the assumption that initial health has no causal effect on subsequent economic growth. We argue that such an effect is likely, primarily because childhood health affects adult productivity. In our au...

Economic Integration, Market Power and Technological Change We examine a common market which expands by integrating new regions. Capitalists are strategically interdependent through the goods market and they improve their productivity through R&D. Production and R&D employ unionized workers. The purpose of integration is to maximize a weighed average of workers’ and capitalists’ utilities. The ...

Questioning the underlying assumptions of the process of creative destruction, we conceptualize an alternative process of creative construction that may characterize the dynamics between entrants and incumbents. We discuss the underlying mechanism of knowledge spillover strategic entrepreneurship whereby knowledge investments by existing organizations, when coupled with entrepreneurial action b...

This paper presents a microfounded theory of long-term development. We model the interplay between economic variables, namely the process of human capital formation and technological progress, and the biological constraint of finite lifetime expectancy. All these processes affect each other and are endogenously determined. The model is analytically solved and simulated for illustrative purposes...

This paper challenges the current belief that income inequality has a negative relationship with economic growth. It uses an improved data set on income inequality which not only reduces measurement error, but also allows estimation via a panel technique. Panel estimation makes it possible to control for time-invariant country-specific effects, therefore eliminating a potential source of omitte...