Autori
Del Rio, Fernando
Licandro, Omar
Boucekkinne, Raouf

Titolo
Obsolescence and modernization in the growth process
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 2001 - Fascicolo: 18 - Pagina iniziale: 1 - Pagina finale: 20

In this paper, an R&D based endogenous growth model is built up incorporating Schumpeterian growth and embodied technological progress. Under embodiment, long run growth is shown to be affected by the following effects: (i) obsolescence costs add to the user cost of capital, reducing the rearch effort; and (ii) the modernization of capital through investment raises the incentives to undertake research activities. Applied to the understanding of the growth enhancing role of both capital and R&D subsidies, we conclude that the positive effect of modernization more than compensate the negative effect of obsolescence.




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