Groth, Christian and Wendner, Ronald (2011): Learning by investing, embodiment, and speed of convergence.
There is a more recent version of this item available. 

PDF
MPRA_paper_29008.pdf Download (272kB)  Preview 
Abstract
This paper sets up a dynamic general equilibrium model to study how the composition of technical progress affects the asymptotic speed of convergence. The following questions are addressed: Will endogenizing a fraction of the productivity increases as coming from learning by investing help to generate a low asymptotic speed of convergence in accordance with the empirical evidence? Does it matter whether learning originates in gross or net investment? The answers to both questions turn out to be: yes, a lot. The third question addressed is: Does the speed of convergence significantly depend on the degree to which learning by investing takes the embodied form rather than the disembodied form? The answer turns out to be: no. These results point to a speed of convergence on the small side of 2% per year and possibly tending to a lower level in the future due to the rising importance of investmentspecific learning in the wake of the computer revolution as the empirical evidence suggests.
Item Type:  MPRA Paper 

Original Title:  Learning by investing, embodiment, and speed of convergence 
English Title:  Learning by investing, embodiment, and speed of convergence 
Language:  English 
Keywords:  Transitional dynamics, speed of convergence, learning by investing, embodied technological progress, decomposable dynamics 
Subjects:  O  Economic Development, Innovation, Technological Change, and Growth > O4  Economic Growth and Aggregate Productivity > O41  One, Two, and Multisector Growth Models D  Microeconomics > D9  Intertemporal Choice > D91  Intertemporal Household Choice ; Life Cycle Models and Saving E  Macroeconomics and Monetary Economics > E2  Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21  Consumption ; Saving ; Wealth 
Item ID:  29008 
Depositing User:  Ron Wendner 
Date Deposited:  24. Feb 2011 18:32 
Last Modified:  30. Dec 2015 10:30 
References:  Acemoglu, D. (2009), Introduction to Modern Economic Growth, Princeton: Princeton University Press. Aghion, P., P. Howitt (1998), Endogenous Growth Theory, Cambridge (Mass.): MIT Press. Aghion, P., P. Howitt (2009), The Economics of Growth, Cambridge (Mass.): MIT Press. Arrow, K. J. (1962), The Economic Implications of Learning by Doing. Review of Economic Studies 29, 15373. Barro, R. J., X. SalaiMartin (1992), Convergence, Journal of Political Economy 100, 223251. Barro, R. J., X. SalaiMartin (2004), Economic Growth, 2nd ed., Cambridge (Mass.): MIT Press. Boucekkine, R., F. del Rio, O. Licandro (2003), Embodied Technological Change, Learningbydoing and the Productivity Slowdown. Scandinavian Journal of Economics 105 (1), 8797. Boucekkine, R., T. RuizTamarit (2004), Imbalance Effects in the Lucas model: An Analytical Exploration, Topics in Macroeconomics 4 (1) Article 15. Chatterjee, S. (2005), Capital Utilization, Economic Growth and Convergence, Journal of Economic Dynamics and Development 29, 20932124. de la Croix, D. P. Michel, A Theory of Economic Growth, Cambridge, UK: Cambridge University Press. Eicher, T., S. J. Turnovsky (1999), Convergence Speeds and Transitional Dynamics in NonScale Growth Models, Journal of Economic Growth 4, 413428. Evans, P. (1997), How Fast do Economies Converge?, Review of Economics and Statistics 79, 219225. Greenwood, J., Z. Hercowitz, P. Krusell (1997), LongRun Implications of InvestmentSpecific Technological Change. American Economic Review 87 (3), 342362. Greenwood, J., B. Jovanovic (2001), Accounting for growth. In: New Developments in Productivity Analysis}, ed. by C. R. Hulten, E. R. Dean, M. J. Harper, NBER Studies in Income and Wealth, Chicago: University of Chicago Press. Groth, C. (2010), Embodied Learning and Growth: The Simple Analytics, Working Paper, Department of Economics, University of Copenhagen. Groth, C., K.J. Koch, T. M. Steger (2010), When Economic Growth is Less Than Exponential, Economic Theory 44, 213242. Hornstein, A., P. Krusell (1996), Can technology improvements cause productivity slowdowns? NBER Macroeconomics Annual 11, 209259. Hornstein, A., P. Krusell, G. L. Violante (2005), The Effect of Technical Change on Labor Market Inequalities. In: Handbook of Economic Growth, vol. 1B, ed. by P. Aghion, and S. N. Durlauf, Amsterdam: Elsevier, 12751370. Islam, N. (1995), Growth Empirics. A Panel Data Approach, Quarterly Journal of Economics 110, 11271170. Jovanovic, B. (1997), Learning and Growth. In: Advances in Economics and Econometrics: Theory and Applications, vol. II, ed. by D. M. Kreps and K. F. Wallis, Cambridge: Cambridge University Press, 318339. Jovanovic, B., P. L. Rousseau (2002), Moore's Law and Learning by Doing, Review of Economic Dynamics 5, 346375. Levine, R., D. Renelt (1992), A Sensitivity Analysis of CrossCountry Growth Regressions, American Economic Review 82, 942963. Mankiw, N. G., D. Romer, D. Weil (1992), A Contribution to the Empirics of Economic Growth, Quarterly Journal of Economics 107, 407438. McQinn, K., K. Whelan (2007), Conditional Convergence and the Dynamics of the CapitalOutput Ratio, Journal of Economic Growth 12, 159184. Ortigueira, S., M. S. Santos (1997), On the Speed of Convergence in Endogenous Growth Models, American Economic Review 87, 383  399. Phelps, E. (1962), The New View of Investment: A Neoclassical Analysis, Quarterly Journal of Economics 76 (4), 548567. Romer, P. M. (1986), Increasing Returns and Longrun Growth, Journal of Political Economy 94, 10021037. Sakellaris, P., D. J. Wilson (2004), Quantifying Embodied Technological Change, Review of Economic Dynamics 7, 126. Solow, R. M. (1960), Investment and Technical Progress. In: K. J. Arrow, S. Karlin, and P. Suppes, eds., Mathematical Methods in the Social Sciences, Stanford: Stanford University Press, pp. 89104. Turnovsky, S. J. (2002), Intertemporal and Intratemporal Substitution, and the Speed of Convergence in the Neoclassical Growth Model, Journal of Economic Dynamics and Control 26, 17651785. Xie, D. (1994), Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria, Journal of Economic Theory 63, 97112. Valdes, B. (1999), Economic Growth. Theory, Empirics and Policy, Cheltenham, UK: Edward Elgar. Williams, R. L., R. L. Crouch (1972), The Adjustment Speed of Neoclassical Growth Models, Journal of Economic Theory 4, 552556. 
URI:  https://mpra.ub.unimuenchen.de/id/eprint/29008 
Available Versions of this Item
 Learning by investing, embodiment, and speed of convergence. (deposited 24. Feb 2011 18:32) [Currently Displayed]