Autori:
Del Rio, Fernando,
Licandro, Omar,
Boucekkinne, RaoufTitolo:
Obsolescence and modernization in the growth processPeriodico:
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papersAnno:
2001 - Fascicolo:
18 - Pagina iniziale:
1 - Pagina finale:
20In 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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