We provide a re-foundation of the symmetric growth equilibrium characterizing the research sector of all vertical R&D-driven growth models. This result does not rely on the usual assumption of a symmetric expectation on the future per-sector R&D expenditure. Indeed, with this structure of expectations, returns in R&D are equalized, and agents turn out to be indifferent as to where targeting research: hence, the problem of the allocation of R&D investments across sectors is indeterminate. In line with the `true' Schumpeterian perspective, we solve this indeterminacy by allowing for decision makers strictly uncertain about the future per-sector distribution of R&D efforts. By using the Gilboa-Schmeidler's MEU decision rule, we prove that the symmetric structure of R&D investment is the unique rational expectations (RE) equilibrium compatible with uncertainty-averse agents adopting a maximin strategy.

An Uncertainty-Based Explanation of Symmetric Growth in Schumpeterian Growth Models / Cozzi, Guido; Giordani, Paolo; Zamparelli, Luca. - No. 06-08:(2006).

An Uncertainty-Based Explanation of Symmetric Growth in Schumpeterian Growth Models

COZZI, GUIDO;GIORDANI, PAOLO;ZAMPARELLI, LUCA
2006

Abstract

We provide a re-foundation of the symmetric growth equilibrium characterizing the research sector of all vertical R&D-driven growth models. This result does not rely on the usual assumption of a symmetric expectation on the future per-sector R&D expenditure. Indeed, with this structure of expectations, returns in R&D are equalized, and agents turn out to be indifferent as to where targeting research: hence, the problem of the allocation of R&D investments across sectors is indeterminate. In line with the `true' Schumpeterian perspective, we solve this indeterminacy by allowing for decision makers strictly uncertain about the future per-sector distribution of R&D efforts. By using the Gilboa-Schmeidler's MEU decision rule, we prove that the symmetric structure of R&D investment is the unique rational expectations (RE) equilibrium compatible with uncertainty-averse agents adopting a maximin strategy.
R&D-Driven Growth Models; Multi-Prior Beliefs; Maxmin Strategy; Symmetric Equilibrium
An Uncertainty-Based Explanation of Symmetric Growth in Schumpeterian Growth Models / Cozzi, Guido; Giordani, Paolo; Zamparelli, Luca. - No. 06-08:(2006).
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/39260
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