The distribution of technological progress

The size distribution of the domains of US-patented technological knowledge obeys an exponential law, revealing a disproportionable concentration of progress among larger domains. Our analyses suggest that this phenomenon is explained by a combination of two factors. First, domains’ trajectories of growth have inherently different potentials. Second, differences in domains’ potentials are magnified by a mechanism—domains’ self-hybridization—endogenous to the process of knowledge growth. Our results show that in addition to being stable, the observed distribution of technological progress is likely to arise under very general conditions.     

Endogenizing market institutions: An experimental approach

We study experimental two-sided markets in which the information structure is endogenous. When submitting an offer, a trader decides which other traders will be informed about the offer. This setup allows both a decentralized bargaining market (Chamberlin, J. Polit. Econ. 56 (1948) 95), and a double auction market (Smith J. Polit. Econ. 70 (1962) 111) as special cases. The results show that offers are typically directed to all traders of the other side of the market, but to none of the traders of the same side of the market. Even though traders receive much less information, the resulting market institution leads to the same outcomes in terms of prices and efficiency as a double auction market. In two additional treatments we examine the robustness of these results. First, it is found that the market institution adapts predictably, but not necessarily efficiently, to the imposition of transaction costs. Second, we find that the preference of sellers to conceal offers from competitors is strict. At the same time, sellers benefit collectively when they reveal offers to each other.     

The impact of disembodied technological progress on unemployment

This paper studies the relationship between disembodied technological progress and unemployment in a standard search-matching model. We find that the sign of the correlation crucially depends on the degree of idiosyncratic uncertainty. The analysis uncovers a new effect whereby an increase in growth intensifies the endogenous rate of job separation because it raises the workers' outside option. For plausible parameter values, the outside option effect outweighs the capitalization effect, so that disembodied technological progress increases the rate of unemployment.     

Endogenizing leadership in tax competition

In this paper we extend the standard approach of horizontal tax competition by endogenizing the timing of decisions made by the competing jurisdictions. Following the literature on the endogenous timing in duopoly games, we consider a pre-play stage, where jurisdictions commit themselves to move early or late, i.e. to fix their tax rate at a first or second stage. We highlight that at least one jurisdiction experiments a second-mover advantage. We show that the Subgame Perfect Equilibria (SPEs) correspond to the two Stackelberg situations yielding to a coordination problem. In order to solve this issue, we consider a quadratic specification of the production function, and we use two criteria of selection: Pareto-dominance and risk-dominance. We emphasize that at the risk-dominant equilibrium the less productive or smaller jurisdiction leads and hence loses the second-mover advantage. If asymmetry among jurisdictions is sufficient, Pareto-dominance reinforces risk-dominance in selecting the same SPE. Three results may be deduced from our analysis: (i) the downward pressure on tax rates is less severe than predicted; (ii) the smaller jurisdiction leads; (iii) the ‘big-country-higher-tax-rate’ rule does not always hold.     

A model for bounded technological progress

This paper presents a simple model capable of handling empirical cases where technology is bounded. The theoretical model is illustrated using empirical data from the Swedish pulp industry, 1937–;78.     

技术进步对能源消费回报效应的估算

"回报效应"是能源经济学中的一个著名命题,但在国内尚缺乏实证检验.本文以改革开放以来中国宏观经济能源消费数据为样本,对这一命题进行了计量检验.结果表明,在中国宏观经济层面上,"回报效应"在30-80%波动,而且20世纪90年代的平均回报率要明显低于20世纪80年代.对此进一步分析后本文认为"回报效应"将呈现三种趋势:"回报效应"越来越低;更多地体现为"硬"技术进步方面;更多地体现在生活部门.     

Growth,technological progress,and trade

I would like to thank Gene Grossman for allowing me to use insights from our joint ongoing work in the preparation of this paper, and to Paul Romer and Martin Weitzman for comments on an earlier draft.     

Firm exit,technological progress and trade

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher productivity firms survive longer, most firm closures are young firms, higher productivity exporters are more likely to continue to export compared to less productive exporters and market exits as well as firm closures are typically preceded by periods of contracting market shares. The present paper shows that the simple inclusion of exogenous economy wide technological progress into the standard Melitz (2003) model generates a tractable dynamic framework that generates endogenous exit decisions of firms in line with the stylized facts. Furthermore, we derive the effects of faster technological progress and trade liberalization on export market exit and firm closure.     

ICT-specific technological progress in the United Kingdom

This paper analyses the impact of rapid technological change in the information and communications technology (ICT) sector on economic growth in the United Kingdom. We find that technological progress specific to the ICT sector accounts for around 20–30% of long-run labor productivity growth. We demonstrate that a permanent increase in the growth rate of ICT-specific technological progress will increase the investment expenditure share of GDP but lower the aggregate depreciation rate, while an increase in the return to investment in ICT will increase both the expenditure share and the depreciation rate.     

A reformulation of the technological progress function

In its actual construction, the ordinary technological progress function is concluded to be theoretically defective, because, among other things, (1) it is not in keeping with the dynamic perspective in which technological change occurs, (2) it leaves unaccounted the nonlinearities involved in the learning process, and what is even more important, (3) it is not stochastically specified. Furthermore, it is unsuitable for long-term prediction from time-series data because it ignores a “limit of learning”, which is approached if not reached. Empirically also it is found to be grossly inadequate. A reformulation of the technological progress function is developed here by way of a solution to some of these problems and it is applied to a variety of cases. The role of availability of knowledge and complexity in engineering design process is also investigated in a preliminary way by means of two a priori hypotheses developed in the main body of the paper. Directions of further research are indicated.     

Markets with technological progress: pricing,quality, and novelty

New and old products differ in two respects: quality and newness. Whereas a higher quality of a new product always benefits consumers, the newness itself benefits some consumers, but not others, and for some, it is even a disadvantage. We capture these features in a Hotelling model of OverLapping Innovators (HOLI model), entailing a sequence of static Hotelling games of horizontal product differentiation (newness), that we extend by vertical product differentiation (quality). In this model, the firms compete on quality and price.     

Endogenous technological progress in a multi-sector growth model

This paper presents an endogenous growth model driven by human capital, where human capital can be allocated across three sectors: the production of the final consumption good, the educational sector and the production of technological capital (in the form of knowledge or ideas). In our model, which also includes public expenditure and population growth, labor augmenting technical progress is endogenous and this enriches the transitional dynamics of the economy. With respect to ideas-based growth models, we assume knowledge is produced according to a neoclassical technology, combining ideas and human capital. Such an assumption is motivated by empirical works showing the existence of significant decreasing returns in the creation of ideas at the aggregate level (as Kortum, 1993; and Pessoa, 2005) and of the weak relationship between some inputs of the knowledge production process (as the number of researchers) and the total factor productivity growth rate (as Jones, 2002). Under some general conditions, this economy exhibits the existence of a steady state equilibrium and an unstable multidimensional manifold. Numerical examples are provided to show the existence of stable arms.     

A functional approach for studying technological progress: Extension to energy technology

This paper extends a broad functional category approach for the study of technological capability progress recently developed and applied to information technology to a second key case—that of energy based technologies. The approach is applied to the same three functional operations—storage, transportation and transformation—that were used for information technology by first building a 100 plus year database for each of the three energy-based functional categories. In agreement with the results for information technology in the first paper, the energy technology results indicate that the functional approach offers a stable methodology for assessing longer time technological progress trends. Moreover, similar to what was found with information technology in the first study, the functional capability for energy technology shows continual—if not continuous—improvement that is best quantitatively described as exponential with respect to time. The absence of capability discontinuities—even with large technology displacement—and the lack of clear saturation effects are found with energy as it was with information. However, some key differences between energy and information technology are seen and these include:

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Lower rates of progress for energy technology over the entire period: 19-37% annually for Information Technology and 3-13% for Energy Technology.

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Substantial variability of progress rates is found within given functional categories for energy compared to relatively small variation within any one category for information technology. The strongest variation is found among capability progress among different energy types.

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More challenging data recovery and metric definition for energy as compared to information technology.

These findings are interpreted in terms of fundamental differences between energy and information including the losses and efficiency constraints on energy. We apply Whitney's insight that these fundamental differences lead to naturally modular information technology artifacts. The higher progress rates of information-based as opposed to energy-based technologies follows since decomposable systems can progress more rapidly due to the greater ease of independent as opposed to simultaneous development. In addition, the broad implications of our findings to studies of the relationships between technical and social change are briefly discussed.     

International trade and technological progress in china: Evidence from time series

Using annual time series data (1983–2007), this paper examines the nexus between international trade and technological progress in China. The time series properties of the data are analyzed by bounds testing approach and vector error-correction model. The empirical results show that, it is not international trade volume and export trade volume but the import trade volume that is cointegrated with total factor productivity. The paper also finds that, in the long run, there is a reciprocal Granger causal relationship between the change of import trade volume and the change of total factor productivity, and in the short run, there is no evidence to support the Granger causality between these changes of the two variables.     

A functional approach for studying technological progress: Application to information technology

This paper develops and assesses a broad functional category approach to arriving at metrics for assessing technological progress. The approach is applied to three functional categories of information technology — storage, transportation and transformation by first building a 100 plus year database for each of the three functional categories. The results indicate generally continuous progress for each functional category independent of the specific underlying technological artifacts dominating at different times. Thus, the empirical results reported in this study indicate that the functional category approach offers a more stable and reliable methodology for assessing longer time technological progress trends. Therefore, this approach offers the promise of being more useful in technological forecasting for large-scale change even as its ability to forecast specific dominant technological trajectories has been compromised.     

Anticipation effects of technological progress on capital accumulation: a vintage capital approach

Due to embodied technological progress new generations of capital goods are more productive. Therefore, in order to study the effects of technological progress, a model must be analyzed in which different generations of capital goods can be distinguished. We determine in what way the firm adjusts current investments to predictions of technological progress. In the presence of market power we show that a negative anticipation effect occurs, i.e. current investments in recent generations of capital goods decline when faster technological progress will take place in the future, because then it becomes more attractive to wait for new generations of capital goods. In case that only investments in new machines are possible, actually a whole wave of anticipation phases arises.     

Natural resources,technological progress,and economic modernization

The present inquiry focuses on the modernization perspectives of the commodity‐exporting countries through the lens of development economics. To this end, the study adopts the Kaldorian framework to address the modernization effects, epitomized in the absorption of surplus labor. To trace the process of economic modernization, the study augments Lewis’s dualistic economy model by the extractive sector. Three different scenarios for the management of resource revenues are scrutinized. An altruistic mode, which implies a pure redistribution of the revenues among the poor swaths of the population, protracts the process of economic modernization, requires a greater amount of capital stock, and harbors a greater risk of a poverty trap. This effect is less pronounced if the modern sector is more capital‐intensive. A productive mode, which elicits full reinvestment of the commodity revenues, in contrast, accelerates the pace of economic modernization. Further, predicated on the scrutiny of a more realistic scenario, a bargaining mode, the study derives the condition for a net positive (or negative) modernization effect. The study identifies technical progress alongside capital accumulation as a further important source of economic modernization.     

On using relative prices to measure capital-specific technological progress

Recently, Greenwood, Hercowitz and Krusell (GHK) have identified the relative price of (new) capital with capital-specific technological progress. In a two-sector growth model, however, the relative price of capital equals the ratio of the productivity processes in the two sectors. Restrictions from this model are used with data on wages and prices to construct measures of productivity growth and test the GHK identification, which is easily rejected by the data. This raises questions about various measures of the contribution that capital-specific technological progress might make to the economy. This identification also induces a negative correlation between the resulting measures of capital-specific and economy-wide technological change, which potentially explains why papers employing this identification find that capital-specific technological change accelerated in the mid-1970s. We impose structure on the productivity measures based on their long-run behavior and find evidence of a slowdown in productivity in the 1970s that is common to both sectors and an acceleration in the mid-1990s that is exclusive to the capital sector.     

Resource scarcity,technological progress,and stochastic growth

Will shortages of natural resources constrain economic growth? The answer seems yes, as the amount of natural resources on earth is finite. There can, however, be two excuses for this. First, the resource-saving technological progress might undo resource scarcity. Second, at the country level, countries can import resources from other countries. This paper revisits these two excuses. For technology, not all technological progress is resource-saving, and its arrival is unpredictable. For the import argument, at the global level, the world cannot make up for a shortage of natural resources by importing. Moreover, the amount of resources is difficult to forecast. To address these, I construct the open, stochastic two-sector endogenous growth model with exhaustible resources. I then analytically show that the answer is sensitive to the interaction between technology and resource shocks. In some cases, I find that higher resource uncertainty accelerates the expected growth and improves the welfare of agents.