Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/128724 
Year of Publication: 
2002
Series/Report no.: 
WIFO Working Papers No. 175
Publisher: 
Austrian Institute of Economic Research (WIFO), Vienna
Abstract: 
We provide steps towards a welfare analysis of a two-country endogenous growth model where a relatively small follower absorbs part of the knowledge generated in the leading country. To solve a suitably defined infinite-horizon dynamic optimization problem a specialized version of the Pontryagin maximum principle had to be applied. For a quite small follower, optimization produces the same asymptotic rate of innovation as the market. However, relative knowledge stocks and levels of productivity differ in the two solutions. Thus, optimal policy intervention has no effect on long-run growth rates but affects these relative levels.
Subjects: 
Endogenous Growth
R&D Spillovers
Absorptive Capacities
Dynamic Optimization
JEL: 
C61
O30
O40
Document Type: 
Working Paper

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