Working Paper: CEPR ID: DP6408
Authors: Liwa Rachel Ngai; Roberto Samaniego
Abstract: We develop a multi-sector general equilibrium model in which productivity growth is driven by the generation of knowledge. In the model, firms allocate resources towards the production of goods and the production of new knowledge, in response to industry-specific factors of demand and technology.In equilibrium, we find that long run differences in research intensity and productivity growth are primarily driven by the parameters of the production function for knowledge -- particularly the extent to which the production of new knowledge benefits from prior knowledge, which we term receptivity. Conditional on receptivity, whether the production of knowledge relies on prior knowledge that is internally generated by the firm or whether it instead "spills over" from its competitors does not appear to be quantitatively important. The results are consistent with a number of empirical findings on the relationship between research intensity and rates of technical change.
Keywords: Multisector; Growth; R&D Intensity; Technological Opportunity; Total Factor Productivity
JEL Codes: D24; O31; O41; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Receptivity (O36) | TFP growth (O49) |
| Appropriability conditions (P14) | R&D intensity (O32) |
| Receptivity (O36) | R&D intensity (O32) |
| R&D intensity (O32) | TFP growth (O49) |
| TFP growth (O49) | Knowledge spillovers (O36) |
| Knowledge spillovers (O36) | Receptivity (O36) |