Economics Dictionary of ArgumentsHome
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| Research: Research is the systematic process of collecting, analyzing, and interpreting information to answer a question or solve a problem. It is used in science, engineering, medicine, business, and the humanities. See also Science, Method, Justification, Confirmation, Certainty, Reflection, Discourse. _____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Peter W. Howitt on Research - Dictionary of Arguments
Aghion I 324 Research/Aghion/Howitt: [The] functional relationship between research in two successive periods has a unique fixed point, which defines a stationary equilibrium. >Fixed points. The stationary equilibrium exhibits balanced growth, in the sense that the allocation of skilled labor between research and manufacturing remains unchanged with each innovation; Aghion I 325 the log of GNP follows a random walk with drift. This is not always, however, the only equilibrium in the model. >Gross National Product (GNP), >Skilled labour. One noteworthy implication of the negative dependency of current research upon future research is the possible existence of what we call a "no-growth trap," a cyclical equilibrium in which the level of research oscillates deterministically between two levels each period, and in which the lower of these two levels is zero. >Economic growth, >Endogenous growth. An economy in such an equilibrium would stop growing in finite time, because with no research there would be no innovation, and hence the period with no research would never come to an end. >Equilibrium, >Equilibrium theory, >Innovation, >Inventions, >Research and Development. The (rational) expectation that the next innovation would be followed by a very high level of research would discourage anyone from undertaking that innovation. Another implication is that the average growth rate of the economy is not necessarily increased by an increase in the productivity of research. In particular, a parameter change that makes research more productive in some states of the world can discourage research in other states, by increasing the threat of obsolescence faced by the product of research in those other states, to such an extent that the average growth rate is reduced. >Productivity, >Innovation/Aghion/Howitt. From a normative point of view, the average growth rate in stationary equilibrium may be more or less than socially optimal because of the presence of conflicting distortionary effects. Specifically, although the model includes the appropriability and intertemporal spillover effects which generate a less than optimal growth rate in Romer's (1990)(1) model, it also has effects that work in the opposite direction. In particular, there is a "business-stealing" effect of the sort familiar from the patent-race literature (Tirole (1988(2), p. 399)). That is, researchers do not internalize the destruction of existing rents created by their innovations. When the size of innovations is taken as given, the business stealing effect can lead to too much growth. In addition, we find that when the size of innovations is endogenized, the business stealing effect tends to make innovations too small. >Innovation/Economic theories. Cf. >Intellectual property, >Patents, >Copyright. 1. ROMER, P. M. (1990): "Endogenous Technological Change," Journal of Political Economy, 98, S71-S102. 2. TIROLE, J. (1988): The Theory of Industrial Organization. Cambridge, MA: M.I.T. Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Howitt, Peter W. Aghion I Philippe Aghion Peter W. Howitt A Model of Growth Through Creative Destruction Econometrica, Vol. 60, No. 2 (Mar., 1992), pp. 323-351 1992 |
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