Giordani, Paolo E. and Zamparelli, Luca (2007): The Importance of Industrial Policy in Quality-Ladder Growth Models.
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Abstract
We extend the class of quality-ladder growth models (Grossman- Helpman (1991), Segerstrom (1998) and others), to encompass an economy with asymmetric fundamentals. In contrast to the standard framework, in our model industries may di¤er in terms of their innovative potential (quality jumps and arrival rates) and consumers�preferences. This extension allows us to bring industrial policy back into the realm of the growth policy debate. We �rst show that it is always possible to raise the long-run growth rate and the social welfare of the economy through a costless tax/subsidy scheme reallocating resources towards the relatively more promising industries. We then prove that, in certain economies, even a mere pro�t taxation policy increases economic growth and social welfare above the laissez-faire.
Item Type: | MPRA Paper |
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Original Title: | The Importance of Industrial Policy in Quality-Ladder Growth Models |
Language: | English |
Keywords: | Innovation-Driven Growth, Asymmetric Fundamentals, Industrial Policy |
Subjects: | O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O38 - Government Policy O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D |
Item ID: | 6142 |
Depositing User: | Luca Zamparelli |
Date Deposited: | 07 Dec 2007 00:24 |
Last Modified: | 27 Sep 2019 17:17 |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/6142 |