Implementing Technology

39 Pages Posted: 7 Feb 2007 Last revised: 18 Sep 2010

See all articles by Diego Comin

Diego Comin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Bart Hobijn

ASU

Date Written: February 2007

Abstract

We introduce a tractable model of endogenous growth in which the returns to innovation are determined by the technology adoption decisions of the users of new technologies. Technology adoption involves an implementation investment that determines the initial productivity of a new technology. After implementation, learning increases the productivity of a technology to its full potential. In this framework, implementation enhances growth, while growth increases obsolescence and reduces implementation. In a calibrated version of our model, the optimal policy involves a subsidy to capital and to implementation and a R&D tax. This policy would lead to a welfare improvement of 7.6 percent. Out of steady-state analysis yields that the transitional dynamics of the detrended variables after a shock to capital are very similar to the dynamics of the neoclassical growth model, but transitory shocks have permanent effects on the level of productivity.

Suggested Citation

Comin, Diego and Hobijn, Bart, Implementing Technology (February 2007). NBER Working Paper No. w12886, Available at SSRN: https://ssrn.com/abstract=961807

Diego Comin (Contact Author)

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Bart Hobijn

ASU ( email )

501 E. Orange Street
Tempe, AZ 85287-9801
United States
(480)-965-0215 (Phone)

HOME PAGE: http://www.barthobijn.net

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