TY - JOUR
T1 - (Un)anticipated Technological Change in an Endogenous Growth Model
AU - Conway, Bruce A.
AU - Rosenblatt-Wisch, Rina
AU - Schenk-Hopp, Klaus Reiner
N1 - Funding Information:
∗The authors would like to thank Bruce Mizrach (the Editor) and an anonymous referee for their helpful comments. Financial support by the National Centre of Competence in Research “Financial Valuation and Risk Management” is gratefully acknowledged. The views expressed in this paper are those of the authors and are not necessarily shared by the Swiss National Bank.
PY - 2009/3/6
Y1 - 2009/3/6
N2 - This paper examines, numerically, the impact of a negative exogenous shock to marginal productivity (such as ecological government regulation that becomes effective at some point in time) in an endogenous finite time growth model with sluggish reallocation of human capital. The policy can be anticipated or unanticipated by the economic agents, and it can also be announced but not implemented. It turns out that these frictions have very strong long-run effects on consumption and output, and on the optimal allocation of capital and labor in particular. The qualitative properties are closely related to those found in homogenous labor models with positive productivity shocks. The numerical optimization method employed here proved very successful in qualitatively similar problems in engineering but has not yet found its way into macroeconomic models of growth.
AB - This paper examines, numerically, the impact of a negative exogenous shock to marginal productivity (such as ecological government regulation that becomes effective at some point in time) in an endogenous finite time growth model with sluggish reallocation of human capital. The policy can be anticipated or unanticipated by the economic agents, and it can also be announced but not implemented. It turns out that these frictions have very strong long-run effects on consumption and output, and on the optimal allocation of capital and labor in particular. The qualitative properties are closely related to those found in homogenous labor models with positive productivity shocks. The numerical optimization method employed here proved very successful in qualitatively similar problems in engineering but has not yet found its way into macroeconomic models of growth.
KW - Frictions
KW - Runge-Kutta parallel-shooting algorithm
KW - Technology shock
KW - Two-sector endogenous growth model
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U2 - 10.2202/1558-3708.1526
DO - 10.2202/1558-3708.1526
M3 - Article
AN - SCOPUS:65249159061
VL - 13
JO - Studies in Nonlinear Dynamics and Econometrics
JF - Studies in Nonlinear Dynamics and Econometrics
SN - 1081-1826
IS - 1
M1 - 3
ER -