Endogenous Technical Change Research Articles

Emission Trading Restrictions with Endogenous Technological Change

In this paper we use a simple climate model with endogenous environmental technical change in order to analyse the effects on equity and efficiency of different degrees of restrictions on trade in the market for pollution permits. The model is obtained by incorporating in Nordhaus and Yang (1996)'s RICE model the notion of induced technical change as proposed in Goulder and Mathai (1998). With the help of such model we aim at assessing the pros and cons of the introduction of ceilings on emission trading. In particular, we analyse the implications of restrictions on trading both in terms of their cost effectiveness and in terms of their distributional effects. The analysis takes into account the role of environmental technical change that could be enhanced by the presence of ceilings on trading. However, this effect is shown to be offset by the increased abatement cost induced by the larger than optimal adoption of domestic policy measures when ceilings are binding. Hence, our analysis provides little support in favour of quantitative restrictions on emission trading even when these restrictions actually have a positive impact on technical change. Even in terms of equity, ceilings find no justification within our theoretical and modelling framework. Indeed, we find that flexibility mechanisms in the presence of endogenous technical change increase equity and that the highest equity levels are achieved without ceilings, both in the short and in the long run. assessment, emission trading, technical change, ceilings

Endogenous learning in European post-Kyoto scenarios: results from applying the market equilibrium model PRIMES

This paper describes the endogenous technical change mechanism that has been incorporated in the PRIMES model and the main quantitative results in post Kyoto CO2 emission reduction scenarios for the EU energy system. The first section presents the learning mechanism as incorporated in the PRIMES model. Section 2 deals with the definition of alternative learning regimes in PRIMES and their impacts on model results. The achievement of the post Kyoto emission reduction target for the EU energy system under the different learning mechanism regimes is examined in Section 3. Finally the paper concludes with the evaluation of the benefits from technology change due to endogenous learning in achieving post Kyoto emission reduction targets.

Endogenous learning in world post-Kyoto scenarios: application of the POLES model under adaptive expectations

This paper describes the endogenous technical change module that has been incorporated in POLES and the main quantitative results of the new version of the model and corresponding exercises. Section 2 presents the methodology that has been used in order to assess the returns to R&D for the main power generation technologies identified in the model. R&D budget allocation is then analysed for the base case in Section 3, which also illustrates the differences in the behaviour, respectively of the least and most risk-averse agents. Section 4, analyses in detail the changes in budget allocation that are induced by the introduction of CO2 emission constraints to 2030, as well as their impacts on marginal and total abatement costs for the main world regions. As a last step, the consequences of changes in public R&D are examined in Section 5. This exercise shows that the performance and diffusion of the technologies benefiting from the shift in public R&D are largely improved, in spite of noticeable "crowding out" effects - of private research by public research - for these technologies.

A REVIEW OF TECHNICAL CHANGE IN ASSESSMENT OF CLIMATE POLICY

▪ Abstract Climate policy is often discussed as a lever with which to bring about climate-friendly technical innovation and diffusion. However, quantitative policy assessments routinely treat technological change as a factor that is independent of policy. Stabilizing atmospheric concentrations of CO2 cannot be achieved through marginal changes in the way we supply and use energy. The only path to stabilization of climate over the next century that is consistent with widely accepted population and economic-growth scenarios involves substantial decoupling of energy services from carbon emissions. The required rate of structural and technical change for such a goal has been experienced only in the wake of economic and resource crises and for periods of a decade or less. Historic rates of structural and technical change averaged over a century are far from adequate for stabilizing climate. In this paper, we review technical changes in the energy system and a few instances in which energy economic models have begun to include technical change as an endogenous feature of their assessments. Finally, we consider the implications of considering endogenous technical change for critical climate policy questions, such as the cost of control and the appropriate timing of the emissions mitigation effort.

Endogenous International Technology Spillovers and Biased Technical Change in Agriculture

This paper analyzes trade-related knowledge flows from an innovating country to other countries. It is assumed that knowledge is embodied in commodities traded between countries and that the potential productivity of this knowledge is determined by the local usability of foreign technologies. The usability of foreign knowledge is dependent on the local absorption capacity (such as knowledge infrastructure and human capital) and on structural differences (factor endowments or climate) between countries. In agriculture, a large portion of the knowledge is embodied in inputs which cause factor-biased technical change in the receiving sectors. Trade-related knowledge transmission is introduced in an applied multi-region general equilibrium model (GTAP) to study the macro-economic and sectoral impacts of knowledge spillovers and of trade policies. Endogenous embodied technology spillovers bear some important implications for trade policy, because protective measures preclude countries not only from cheaper imports but also from foreign technologies.

Aggregate Demand and Endogenous Growth: a Generalized Keynes‐Kaldor Model of Economic Growth

This paper presents a generalized Keynes‐Kaldor growth model which incorporates both the Cambridge theory of income distribution and endogenous technical change. Within the model, the rate of aggregate demand growth affects both the level of aggregate demand and the rate of output growth. However, demand growth management can only be used to shift the economy from low to high growth equilibria, and cannot produce continuous adjustments in the equilibrium rate of growth. This reveals that management of the growth trajectory is a qualitatively different problematic from management of the level of output. Lastly, the model highlights ambiguities regarding the adjustment dynamics of demand growth.

WARM: a European model for energy and environmental analysis

This paper describes the structure of a newly developed econometric, imperfectly competitive, general equilibrium model for the medium term study of energy and environmental problems. The geographical coverage of the model regards twelve European countries as well as the European Union as a whole. Compared to existing quantitative E3 (economy-energy-environment) models, the WARM model is characterized by a few novel and relevant features Firstly, in contrast to multicountry interlinked models, it copes with the international dimension by integrating differences from a common European denominator within a unified and homogeneously designed framework. A panel data estimation approach is used to achieve this objective. Secondly, in contrast to the traditional market-based philosophy of many econometric models, it adopts a perspective focused upon economic agents' decisions. Thirdly, in contrast with the practice of modelling technical progress as an exogenous and deterministic phenomenon, it incorporates an explicit attempt of modelling the sources and effects of endogenous technical change. A Kalman filter latent variable approach is the methodology from which statistical information on the dynamics of technical progress can be obtained. Finally, all markets in the model are imperfectly competitive, including the labour market where the wage bargaining process is explicitly modelled and estimated. This last feature is especially important in view of the European unemployment problem.

Income Non-Convergence and Rural-Urban Earnings Differentials: Evidence from North Carolina

Considerable attention is currently focussed on the deteriorating social and economic condition of America's communities. Stagnant or worsening poverty rates, unemployment rates, and real incomes over the past decade-along with persistent and widening gaps between the economic performance of and urban areas-are well-documented indicators of the seriousness of this socioeconomic malaise [6; 8; 18]. Coming as it has after a period of relative prosperitythe so-called rural renaissance of the 1970s-the current crisis in America has generated a great deal of consternation among policymakers, social scientists, and other students of development. Current concerns over economic decline coincide with the observation by a number of researchers that the spatial dispersion of income--measured by the variance of income or earnings per capita across geographic units-has increased over the past decade or so. This pattern of income non-convergence has been observed across countries [1], regions of the U.S. [3], and states [5], and is distinctly at odds with the theoretical predictions of standard neo-classical growth theory. A considerable recent literature that accounts for the effects of schooling, human capital accumulation, learning by doing, and endogenous technical change within the context of endogenous growth models seeks to generalize the standard growth model and clarify the conditions under which incomes may be expected to converge or diverge over time [2; 14; 17]. In fact, the recent increase in dispersion of income per capita and the widening disparity in the economic performance of and urban areas appear to be related phenomena. Consider Figure 1, which plots measures of income dispersion and rural-urban income differentials over time for North Carolina's 100 counties. There it will be observed that the coefficient of variation

New Directions in Analytical Political Economy

Analytical political economy - an introduction, Amitava Krishna Dutt. Part 1 Unemployment, finance and growth cycles: fiscal policy and the natural rate, Alan G. Isaac on the modelling of systemic financial fragility, Peter Skott profits and growth dynamics, Marc Jarsulic. Part 2 Accumulation, distribution and technical change: on the long-run stability of capitalist economies - implications of a model of growth and distribution, Amitava Krishna Dutt endogenous technical change, accumulation and distribution, Jong-Il You investment, technical progress and uneven growth - an evolutionary vintage model, Panagis Liossatos. Part 3 Value and price: some suggestions for linking arbitrage, symmetries and the social theory of value, Philip Mirowski prices, capacity utilization and employment in the post-Keynesian traditions, Malcolm Sawyer a classical theory of the terms of trade for newly industrializing countries, William Darity Jr and Sumana Dhar. Part 4 Developing economies and development: agrarian structure, labour supplies and the terms of trade, J. Mohan Rao foreign exchange and fiscal constraints on growth - a reconsideration of structuralist and macroeconomic approaches, Jaime Ros the rational basis of wage determination in regimes of high inflation, Edward J. Amadeo the breakup of the mixed economy in Nicaragua.

Thermodynamic constraints on optimal depletion of copper and aluminum in the United States: a dynamic model of substitution and technical change

The paper proposes a methodology to integrate concepts from thermodynamics into economic models of optimal natural resource use and to empirically determine relationships between changes in thermodynamic states of materials and the use of high-quality energy sources. The integration is aimed at an assessment of technologies, substitution and technical change based on economic concepts that do justice to fundamental physical constraints. A model of natural resource use and production has been developed that combines econometric time series analysis with dynamic modeling techniques. The model explicitly includes thermodynamic constraints on (i) the process of separating minerals from crude ore, (ii) smelting processes, (iii) substitution among inputs, and (iv) endogenous technical change in mining, smelting and refining. Based on empirical information, the model has been simulated to assess outer limits of feasible resource savings in copper and bauxite mining, smelting and refining in the United States. Conclusions are drawn for the evaluation of products and effluents from mining, smelting and refining operations with regard to changes in the physical resource base and environmental quality.

Thermodynamic implications for natural resource extraction and technical change in U.S. copper mining

Motivated by the lack of integrated approaches that do justice to both the thermodynamic and economic aspects of natural resource use and the lack of empirical studies combining the two disciplines, this paper provides an integrated framework for the valuation of technologies, substitution and technical change. The paper determines empirically the relationships between thermodynamic states of materials and the use of high-quality energy sources for the case of copper mining in the United States. The empirical analysis provides the basis for a nonlinear dynamic simulation of optimal resource extraction and endogenous technical change in the light of changing resource quality. The study assesses the potential for future improvements in U.S. copper mining.

Existence of an optimal growth path with endogenous technical change

We prove the existence of an optimal growth path in an economy where goods that are not consumed are either invested in next period capital or in R&D with overall non-convex production possibilities, using results of non-linear functional analysis in weighted L p spaces of Chichilnisky ( Journal of Optimization Theory and Applications, 1977, 61, no. 2, 504–520) and ( Journal of Mathematical Economics, 1981, 8, 1–14).

Schumpeter's circular flow, learning by doing and cyclical growth

A two-sector growth model with endogenous technical change is presented. Concerning technical change, we assume that it is reflected by increases in the stock of human capital which are acquired through learning by doing. As a result, it turns out that transitory or, using the Hopf bifurcation theorem, persistent oscillations of the economic variables may be the outcome. Thus we are able to show that learning mechanisms alone may be sufficient to destroy the circular flow as described by Schumpeter.

Age structure effects on economic growth — Swedish evidence

Abstract This paper argues that age structure is an important factor behind variations in the rate of economic growth. Theoretically, the argument is based on Romer's model of endogenous technical change, human capital theory and the life-cycle theory of savings. Taken together, these theories imply that growth rates are dependent on age structure. Empirically, the existence of age structure effects is demonstrated through an analysis of Swedish growth data for the 1950 to 1989 period. The age pattern of these effects is consistent with an explanation based on differences in savings behaviour and human capital accumulation over the life cycle.

Macroeconomic structure, endogenous technical change and growth

This paper shows the relevance of the macroeconomic structure that governs short-term changes in aggregate demand and income distribution in the determination of long-term growth rates. It develops a new growth model by introducing endogenous technical change into a Keynesian/Marxist synthesis model of accumulation and distribution. This model has multiple equilibria--a high-growth equilibrium that is stable if rising wage share leads to an increase in investment and real wages are somewhat rigid and a low-growth equilibrium that is stable under opposite circumstances. Based on this result, the paper discusses how institutions and history matter in long-term growth. Copyright 1994 by Oxford University Press.

技術革新を内生化した動的産業連関モデルに関する研究

技術革新を内生化した動的産業連関モデルに関する研究

Endogenous technical change and intra- and inter-industry quality competition

This paper considers a non-symmetric quality competition that is occurring not only within the same industry, but also across industries. Both intra- and inter-industry quality competition explain why some industries attract higher R&D expenditures in the R&D race. We find that in equilibrium, higher profits in more advanced industries induce greater efforts in R&D, and consequently a shorter duration of the monopoly position of quality leaders.

Effets d’apprentissage, compétitivité hors-prix et croissance cumulative

A balance-of-payments constrained Kaldorian growth model, with endogenous technical change, is developped in this paper in order to illustrate the links between international specialization, the factors of non-price competitiveness and growth. A countiy’s exports depend on traditional effects such as the growth of world demand and relative price-competitiveness, but also on factors related to the quality of exported goods. The quality of the goods depends on learning effects and therefore is endogenous. The traditional opposition between «static» and «dynamic» criteria for international specialization is emphasized. An empirical application on the cases of Japan and Italy completes the analysis and proposes a modified Thirlwall formula for balance of payments constrained growth.

The Problem of Development: Introduction

The Problem of Development: Introduction

La forme flexible de Fourier: Une évaluation sur données macroéconomiques

We estimate Translog and Fourier forms for three sectors of the French economy. The hypothesis that the former can be reduced to the latter is highly rejected. We show that the hypothesis of an endogenous technical change drops the autocorrelation of the disturbances in the Fourier case only. Finally we compute asymptotic confidence intervals of the elasticities of substitution for each year of our sample. Contrary to the Translog case, the results confirm that the evolutions of the Fourier elastici ties have an economic sense.