Title

An intertemporal microeconomic theory of disembodied and price-induced technical progress

Authors

Authors

M. R. Caputo;Q. Paris

Comments

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Abbreviated Journal Title

Econ. Model.

Keywords

Price induced technical progress; Disembodied technical progress; Comparative dynamics; Optimal control; Testable implications; TECHNOLOGICAL-CHANGE; ADJUSTMENT; DYNAMICS; MONEY; GOODS; Economics

Abstract

A theory of a wealth maximizing, capital accumulating, price taking firm facing adjustment costs and operating in the presence of disembodied and price-induced technical progress is developed. The testable implications of the extended theory are derived under mild assumptions and are thus intrinsic to the theory, not to mention observable, thereby permitting empirical scrutiny of them. The comparative dynamics properties are given in the preferred form of a symmetric and semidefinite matrix. The testable implications are contrasted with their archetypal counterparts from the adjustment cost theory. The comparison shows how (i) the introduction of disembodied and price-induced technical progress into the adjustment cost theory destroys all of its testable properties, and (ii) the disembodied and price-induced technical progress theory nests the adjustment cost theory as a special case. (C) 2013 Elsevier B.V. All rights reserved.

Journal Title

Economic Modelling

Volume

33

Publication Date

1-1-2013

Document Type

Article

Language

English

First Page

631

Last Page

640

WOS Identifier

WOS:000323798100073

ISSN

0264-9993

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