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

    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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