Modeling the Transition to a New Economy: Lessons from Two Technological Revolutions
By Andrew Atkeson, Patrick J. Kehoe. 2007
166 citations recorded by the source corpus.
Many view the period after the Second Industrial Revolution as a paradigmatic example of a transition to a new economy following a technological revolution and conjecture that this historical experience is useful for understanding other transitions, including that after the Information Technology Revolution. We build a model of diffusion and growth to study transitions. We quantify the learning process in our model using data on the life cycle of U.S. manufacturing plants. This model accounts quantitatively for the productivity paradox, the slow diffusion of new technologies, and the ongoing investment in old technologies after the Second Industrial Revolution. The main lesson from our model for the Information Technology Revolution is that the nature of transition following a technological revolution depends on the historical context: transition and diffusion are slow only if agents have built up through learning a large amount of knowledge about old technologies before the transition begins.
Subfields: Economics and Econometrics, Management Science and Operations Research
View Paper: https://www.semanticscholar.org/paper/0e1029059241c4764aa8b66725daa9504a867656
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
- Oleg Itskhoki
- Benjamin Moll
- Charles I. Jones
- Gita Gopinath
- Ariel T. Burstein
- J. David
- Venky Venkateswaran
- Hugo A. Hopenhayn
In Management Science and Operations Research
Citations in the corpus
- Finance and Misallocation: Evidence from Plant-Level Data (2014, unknown): “Expressions (7)-(9) simply rewrite the budget constraint (5) and the borrowing constraint (3) of producers in the modern sector given the new notation.”
- Optimal Development Policies With Financial Frictions (2014, background): “Atkeson and Kehoe, 2007; Buera and Shin, 2013). More formally, Moll (2014) shows, starting with DRS production functions y = ((zk)α`1−α)β with β < 1, that the solution for the production side of the economy under CRS can be obtained by taking the limit as β → 1.”