1,721,074 research outputs found
Inventing or Spying? Implications for Growth
No full textAn engineer graduates if shederives the obvious implications of her instructor's hints. Butthe patent system rewards only the first to present nonobviousadvancements—ideas similarly skilled engineers are notexpected to invent. If a fraction of the newly invented hintsspill over before the technological advances they entail arecompleted and granted legal protection, the R&D workerswill find it convenient to spend some time searching for eachother's hints instead of creating their own. A simple modificationof the basic Schumpeterian model shows that the larger the skilledpopulation, the larger the relative incentive to spy
Ambiguity Attitude, R&D Investments and Economic Growth
No full textThe process aimed at discovering new ideas is an economic activity whose returns are intrinsically uncertain. In a standard neo-Schumpeterian growth framework we assume that, when deciding upon R&D efforts, economic agents hold ‘ambiguous beliefs’ about the exact probability of arrival of the next vertical innovations, and face ambiguity via the α-MEU decision rule (Ghirardato et al. (2004)). Along the steady-state equilibrium the higher the agents’ ambiguity aversion (α), the lower the R&D efforts and, coeteris paribus, the overall economic performance. Consistently with a cross-country empirical evidence, this causal mechanism suggests that, together with the profitability conditions of the economy, different ‘cultural’ attitudes towards ambiguity may contribute to explain the different R&D intensities observed across countries.The process aimed at discovering new ideas is an economic activity whose returns are intrinsically uncertain. In a standard neo-Schumpeterian growth framework we assume that, when deciding upon R&D efforts, economic agents hold ‘ambiguous beliefs’ about the exact probability of arrival of the next vertical innovations, and face ambiguity via the α-MEU decision rule (Ghirardato et al. (2004)). Along the steady-state equilibrium the higher the agents’ ambiguity aversion (α), the lower the R&D efforts and, coeteris paribus, the overall economic performance. Consistently with a cross-country empirical evidence, this causal mechanism suggests that, together with the profitability conditions of the economy, different ‘cultural’ attitudes towards ambiguity may contribute to explain the different R&D intensities observed across countries.Non-Refereed Working Papers / of national relevance onl
An uncertainty-based explanation of symmetric growth in Schumpeterian growth models
Full text linkWe provide a re-foundation of the symmetric growth equilibrium characterizing the research sector of all vertical R&D-driven growth models. This result does not rely on the usual assumption of a symmetric expectation on the future per-sector R&D expenditure. Indeed, with this structure of expectations, returns in R&D are equalized, and agents turn out to be indifferent as to where targeting research: hence, the problem of the allocation of R&D investments across sectors is indeterminate. In line with the ’true’ Schumpeterian perspective, we solve this indeterminacy by allowing for decision makers strictly uncertain about the future per-sector distribution of R&D efforts. By using the Gilboa-Schmeidler’s MEU decision rule, we prove that the symmetric structure of R&D investment is the unique rational expectations (RE) equilibrium compatible with uncertainty-averse agents adopting a maximin strategy
Do Sunspots Matter under Complete Ignorance?
No full textIn a two-period, sunspot, pure-exchange economy we analyze the case in which agents do not assign subjective probabilistic beliefs to the "sunspot activity". Two generations, each of which is made up of identical agents, populate this economy. The participation in the Arrow securities market is restricted and the generation, which is allowed to trade in assets, can alternatively face uncertainty via two distribution-free decision rules under "complete ignorance"(axiomatized by Milnor (1954)): the "minimax regret criterion"(Savage (1954), ch.9) and the
"maxmin return criterion"(Wald (1950)). When the former is used, then sunspots can matter. In particular we prove that, if the economy admits two Walrasian equilibria, then a unique sunspot equilibrium always exists. We pin down this
equilibrium, determine the prices of the Arrow securities and show that, at these prices, no trade in securities takes place. In the same framework we prove that,
with agents using the maxmin return criterion, sunspots do not matter.In a two-period, sunspot, pure-exchange economy we analyze the case in which agents do not assign subjective probabilistic beliefs to the "sunspot activity". Two generations, each of which is made up of identical agents, populate this economy. The participation in the Arrow securities market is restricted and the generation, which is allowed to trade in assets, can alternatively face uncertainty via two distribution-free decision rules under "complete ignorance"(axiomatized by Milnor (1954)): the "minimax regret criterion"(Savage (1954), ch.9) and the
"maxmin return criterion"(Wald (1950)). When the former is used, then sunspots can matter. In particular we prove that, if the economy admits two Walrasian equilibria, then a unique sunspot equilibrium always exists. We pin down this
equilibrium, determine the prices of the Arrow securities and show that, at these prices, no trade in securities takes place. In the same framework we prove that,
with agents using the maxmin return criterion, sunspots do not matter.Non-Refereed Working Papers / of national relevance onl
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