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A model of growth through creative destruction

Aghion, P.; Howitt, P.; (1992) A model of growth through creative destruction. Econometrica , 60 (2) pp. 323-351.

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A model of endogenous growth is developed in which growth is driven by vertical innovations that involve creative destruction. Equilibrium is determined by a forward-looking difference equation, according to which the amount of research in any period depends negatively upon the amount expected next period. The paper analyzes positive and normative properties of stationary equilibria, and shows conditions for the existence of cyclical equilibria and no-growth traps. The growth rate may be more or less than optimal because a business-stealing effect counteracts the usual spillover and appropriability effects. In addition, innovations tend to be too small.

Type: Article
Title: A model of growth through creative destruction
Publisher version: http://www.econometricsociety.org/abstract.asp?ref...
Language: English
Additional information: Please see http://eprints.ucl.ac.uk/17807/ for the working paper version
Keywords: Growth, innovation
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: http://discovery.ucl.ac.uk/id/eprint/17663
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