Digital Innovation and its Potential Consequences: the Elasticity Augmenting Approach

Bertani, Filippo and Raberto, Marco and Teglio, Andrea and Cincotti, Silvano (2021): Digital Innovation and its Potential Consequences: the Elasticity Augmenting Approach.

Abstract

Digital technologies have been experiencing in the last thirty years a considerable development which has radically changed our economy and lives. In particular, the advent of new intangible technologies, represented by software, artificial intelligence and deep learning algorithms, has deeply affected our production systems from manufacturing to services, thanks also to further improvement of tangible computational assets. Investments in digital technologies have been increasing in most of developed countries, posing the issue of forecasting potential scenarios and consequences deriving form this new technological wave. The contribution of this paper is both theoretical and related to model design. First of all we present a new production function based on the concept of organizational units. Then, we enrich the macroeconomic model Eurace integrating this new function in the production processes in order to investigate the potential effects deriving from digital technologies innovation both at the micro and macro level.

• Item Type: MPRA Paper
• Language: English
• Keywords: Elasticity of substitution, Elasticity augmenting approach, Digital transformation, Agent-based economics, Organizational unit.
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

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