Animal spirits and the composition of innovation in a lab-equipment R&D model with transition

• Type: Article in International Scientific Journal
• Date: 2013

Authors

gil, pm (Author) FEP

Journal

Title: Journal of Economics/ Zeitschrift fur Nationalokonomie

Vol. 108 No. 1

Pages: 1-33

ISSN: 0931-8658

Publisher: Springer Nature

Indexing

ISI Web of Knowledge - 3 Citations

Scopus - 3 Citations

Other information

Authenticus ID: P-002-1ZM

DOI: 10.1007/s00712-012-0266-8

Abstract (EN): We study the effect of animal spirits on the composition of aggregate R&D, the consumption level and economic growth in a tournament model of horizontal and vertical R&D. By considering a full lab-equipment specification, the model predicts a positive effect of animal spirits on the balanced-growth-path (BGP) level of per-capita consumption without impacting on economic growth and on aggregate vertical R&D. However, transition is slower under "waves of enthusiasm", implying a longer period in which growth rates are higher than the BGP level. An economy that is subject to expectations shocks then converges at a time-varying speed. On average over time, transition is longer but less "painful"aEuro"i.e., with higher per-capita consumption levels-than otherwise.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 33