Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86024
Authors: 
de Hek, Paul A.
Year of Publication: 
2002
Series/Report no.: 
Tinbergen Institute Discussion Paper 02-047/2
Abstract: 
How does risk or uncertainty in the productivity of research affect the growth rate of the economy? To answer this question, a model of endogenous technological change is used where sustained growth stems from intentional investments in R&D from profit-maximizing firms. The uncertainty arises from the productivity of these investments in R&D. The main result of this analysis is that the relationship between long-run growth and uncertainty (on the productivity of knowledge creation) depends on two main factors - the returns to scale in knowledge creation (increasing or non-increasing) and the value of the elasticity of intertemporal substitution (higher or lower than some critical value).Based on empirical studies on the returns to scale in knowledge creation (non-increasing) and the value of the elasticity of intertemporal substitution (higher than the critical value), we expect a negative relationship between long-run growth and uncertainty regarding the productivity of knowledge creation.
Subjects: 
Long-run growth
Technological change
Uncertainty.
JEL: 
O3
Document Type: 
Working Paper

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