Working Paper: NBER ID: w9604
Authors: Rodolfo E. Manuelli; Ananth Seshadri
Abstract: Empirical evidence suggests that there is a long lag between the time a new technology is introduced and the time at which it is widely adopted. The conventional wisdom is that these observations are inconsistent with the predictions of the frictionless neoclassical model. In this paper we show this to be incorrect. Once the appropriate driving forces are taken into account, the neoclassical model can account for slow' adoption. We illustrate this by developing an industry model to study the equilibrium rate of diffusion of tractors in the U.S. between 1910 and 1960.
Keywords: No keywords provided
JEL Codes: E1; O3; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| input prices (E30) | tractor adoption rates (R48) |
| technology quality (L15) | tractor adoption rates (R48) |
| migration decisions (F22) | tractor adoption rates (R48) |
| real wages (J31) | tractor adoption rates (R48) |
| horse prices (P22) | tractor adoption rates (R48) |
| quality of tractors (L15) | tractor adoption rates (R48) |
| tractor adoption rates (R48) | decline of horses (N91) |
| calibrated model (C51) | tractor adoption rates (R48) |