distinguished lecture on economics in government lessons from past productivity booms the u s economy has been enjoying substantially faster productivity growth for the past eight years than it did over the preceding two decades from 1995 to 2003 labor productivity rose at an average annual rate of about 3 percent up from an average annual rate of around 1 5 percent between 1973 and 1995 in both 2002 and 2003 output per hour increased more than 4 percent the significance of the improvement since 1995 can hardly be overstated even after one takes into account the possibility that the increases of the past two years in part reflect cyclical influences and thus overstate the underlying trend if productivity were to continue to rise at an average annual rate of 3 percent the standard of living in the united states would double roughly every 24 years if on the other hand productivity growth were to revert to an average annual pace of 1 5 percent a doubling in the standard of living would occur every 47 years a number of observers argue that the present era of robust trend productivity growth will soon come to an end others contend that the potential gains to productivity from the technological advances associated with the computer revolu

risk sharing and internal migration over the past two decades more than half the population in rural tanzania migrated within the country profoundly changing the nature of traditional institutions such as informal risk sharing mass internal migration has created geographically disperse networks on which the authors collected detailed panel data by quantifying how shocks and consumption co vary across linked households they show how migrants unilaterally insure their extended family members at home this finding contradicts risk sharing models based on reciprocity but is consistent with assistance driven by social norms migrants sacrifice 3 to 7 percent of their very substantial consumption growth to provide this insurance which seems too trivial to have any stifling effect on their growth through migration

a land of milk and honey with streets paved with gold do emigrants have over optimistic expectations about incomes abroad millions of people emigrate every year in search of better economic and social opportunities anecdotal evidence suggests that emigrants may have over optimistic expectations about the incomes they can earn abroad resulting in excessive migration pressure and in disappointment among those who do migrate yet there is almost no statistical evidence on how accurately these emigrants predict the incomes that they will earn working abroad in this paper the authors combine a natural emigration experiment with unique survey data on would be emigrants probabilistic expectations about employment and incomes in the migration destination their procedure enables them to obtain moments and quantiles of the subjective distribution of expected earnings in the destination country the authors find a significant underestimation of both unconditional and conditional labor earnings at all points in the distribution this underestimation appears driven in part by potential migrants placing too much weight on the negative employment experiences of some migrants and by inaccurate information flows from extended family who may be trying to moderate remittance demands by understating incomes

technological diffusion and asset prices in this paper we demonstrate that the gradual diffusion of technology causes the stock market to exhibit a cyclical behavior more importantly we attribute sharp declines and increases in the stock market such as the ones that occurred in the early 1970s and mid 1990s in the united states to expected rapid technological diffusion

did bank distress stifle innovation during the great depression we find a negative relationship between bank distress and the level quality and trajectory of firm level innovation during the great depression particularly for r d firms operating in capital intensive industries however we also show that because a sufficient number of r d intensive firms were located in counties with lower levels of bank distress or were operating in less capital intensive industries the negative effects were mitigated in aggregate although depression era bank distress was associated with the stifling of innovation our results also help to explain why technological development was still robust following one of the largest shocks in the history of the u s banking system

feature it diffusion and industry and labour market dynamics the emergence and rapid diffusion of information and communication technology is the most radical technological transformation of the last couple of decades and has had an enormous economic impact this bundle of four articles contains research that discusses major economic implications of the diffusion of it they focus on two main implications of it i networks and industry dynamics and ii it and workplace organisation the two sets of two articles contribute both original theoretical insights and new empirical results to these themes

broadband adoption and firm productivity evaluating the benefits of general purpose technology we examine the relationship between the deployment of broadband which we classify as a general purpose technology and the productivity of the deploying firms using panel data that comprises information on all the major local exchange carriers in the united states telecommunications industry from 1995 to 2000 this relationship is an important indicator of the economic impact of new technology adoption we provide a comprehensive analysis of the literature on general purpose technologies as well as on the economic consequences of information and communications technology diffusion and develop a framework to empirically assess the impact of broadband deployment on the productivity our results find a positive relationship between broadband deployment and the carriers productivity and suggest that encouraging the deployment of broadband technologies in addition to the benefits to consumers and firms at the receiving end of the new technology create the potential for better technological efficiencies and increased productivity for the deploying firms the benefits can be enhanced as the firms studied operate in two sided markets where the network effects brought about by the multitude of interconnections can be substantial because of possible second order spillovers of productivity copyright 2010 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

coordination of internal supply chains in vertically integrated high tech manufacturing organizations htmos abstract this paper uses economic mechanisms to coordinate supply chains within high tech manufacturing organizations htmos it models the one shot initial production and allocation decisions involved in the production and marketing of new technologies these decisions are driven by the economic objectives of the firm and of the employees with private information the experts it analyzes and compares the efficiency of three coordination policies centralized command and control centralized revelation and decentralized revelation it shows that decentralized policies introduce an additional cost and it proposes rules of thumb for coordinating supply chains within firms that use many experts

contracting theory and accounting abstract this paper reviews agency theory and its application to accounting issues i discuss the formulation of models of incentive problems caused by moral hazard and adverse selection problems i review theoretical research on the role of performance measures in compensation contracts and i compare how information is aggregated for compensation purposes versus valuation purposes i also review the literature on communication including models where the revelation principle does not apply so that nontruthful reporting and earnings management can take place the paper also discusses capital allocation within firms including transfer pricing and cost allocation problems

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

information decisions and productivity on board computers and capacity utilization in trucking productivity reflects not only how efficiently inputs are transformed into outputs but also how well information is applied to resource allocation decisions this paper examines how information technology has affected capacity utilization in the trucking industry estimates for 1997 indicate that advanced on board computers obcs have increased capacity utilization among adopting trucks by 13 percent these increases are higher than for 1992 suggesting lags in the returns to adoption and are highly skewed across hauls the 1997 estimates imply that obcs have enabled 3 percent higher capacity utilization in the industry which translates to billions of dollars of annual benefits jel d24 l92 o33 o47

do deployment policies pick technologies by not picking applications a simulation of investment decisions in technologies with multiple applications abstract the role of deployment policies that aim to foster technological change has grown considerably especially in the fields of energy and climate however recent research has shown that the adoption of deployment policies carries the potential of locking in the technology that is most cost effective at the point of policy introduction but may be inefficient in the long term the present paper contributes to the emerging literature on the role of deployment policies in creating path dependency and eventually technology lock in while previous studies focused on the relationship between lock in and the technology specificity of deployment policies this paper introduces a new factor the existence of multiple applications for a technology we argue that this factor is highly relevant for technological lock in and should be considered by policy makers to support our argument we simulate the competition among four stationary battery technologies across energy system applications in an investment simulation model this simulation shows that the degree of competition among technologies differs strongly across applications which corresponds with a highly varying lock in probability hence selecting applications in deployment policies very likely corresponds to selecting technologies we discuss the implications of these results for both policy makers and for the academic debate on deployment policies and technological lock in as well as on technology assessment and governance more generally based on the notion that policies can have different technology specificity levels we develop the idea of the application specificity of policies and provide examples of currently enacted deployment policies that vary in terms of their technology and application specificity

technological change and the stock market tobin s average q has usually been well above 1 but fell below 1 during 1974 1984 our model explains this pattern and reconciles it with unchanging aggregate investment the stock market value in the numerator of q reflects ownership of physical capital and knowledge but the denominator measures just physical capital therefore q is usually above 1 periodic arrivals of important new technologies such as the microprocessor in the 1970 s suddenly render old knowledge and capital obsolete causing the stock market to drop national accounts measures of physical capital miss this rapid obsolescence then q appears to drop below 1 jel e44 o3 o41

electrification and energy productivity abstract energy productivity is crucial for sustainable development we use cointegration analyses to investigate the effect of electricity on energy productivity in swedish industry from 1930 to 1990 electricity augmented energy productivity in those industrial branches that used electricity for multiple purposes this productivity effect goes beyond book keeping effects i e it is not only the result of electricity being produced in one sector taking the energy transformation losses and consumed in another receiving the benefits

asymmetric information about migrant earnings and remittance flows this paper examine asymmetric information about migrant earnings and its implications for remittance behavior using a sample of indian households with husbands working overseas in qatar on average wives underreport their husbands income and underreporting is more prevalent in households with higher earning migrants the discrepancy in earning reports is strongly correlated with variation in remittances greater underreporting by wives is associated with lower remittances an exchange model of remittances is developed with asymmetric information and costly state verification the optimal remittance contract prescribes a threshold for remittances that invites verification only if unmet the model s predictions closely match our empirical findings

embodied technological change learning by doing and the productivity slowdown the productivity slowdown faced by the us economy since the first oil shock has been associated with a rise in the decline rate of the relative price of equipment and a reduction in the rate of disembodied technical change we build up a growth model in which learning by doing is the engine of both embodied and disembodied technological progress a change in the relative efficiency of learning by doing from the consumption to the investment sector is shown to imply a technological reassignment consistent with the above mentioned evidence this result derives from the interaction between the obsolescence costs inherent to embodiment and the learning by doing engine

computer mediated transactions every now and then a set of technologies becomes available that sets off a period of combinatorial innovation think of standardized mechanical parts in the 1800s the gasoline engine in the early 1900s electronics in the 1920s integrated circuits in the 1970s and the internet in the last decade or so the component parts of these technologies can be combined and recombined by innovators to create new devices and applications since these innovators are working in parallel with similar components it is common to see simultaneous invention there are many well known examples such as the electric light the airplane the automobile and the telephone many scholars have described such periods of innovation using terms such as recombinant growth general purpose technologies cumulative synthesis and clusters of innovation the internet and the web are wonderful examples of combinatorial innovation in the last 15 years we have seen a huge proliferation of web applications all built from a basic set of component technologies the internet itself was a rather unlikely innovation i like to describe it as a lab experiment that got loose since the internet arose from the research community rather than the private sector it had no obvious business model other public computer networks such as aol compuserve and minitel generally used a subscription models but were centrally controlled and offered little scope for innovation at the user level the internet won out over these alternatives precisely because it offered a flexible set of component technologies which encouraged combinatorial innovation

the formation of risk sharing networks this paper examines the formation of risk sharing networks in the rural philippines we find that geographic proximity possibly correlated with kinship is a major determinant of mutual insurance links among villagers age and wealth differences also play an important role in contrast income correlation and differences in occupation are not determinants of network links reported network links have a strong effect on subsequent gifts and loans gifts between network partners are found to respond to shocks and to differences in health status from this we conclude that intra village mutual insurance links are largely determined by social and geographical proximity and are only weakly the result of purposeful diversification of income risk the paper also makes a methodological contribution to the estimation of dyadic models

the solow productivity paradox what do computers do to productivity 1 you don t see computers everywhere in a meaningful economic sense computers and information processing equipment are a relatively small share of gdp and of the capital stock 2 you only thinkyou see computers everywhere government hedonic price indexes for computers fall too fast according to this position and therefore measured real computer output growth is also too fast 3 you may not see computers everywhere but in the industrial sectors where you most see them output is poorly measured examples are finance and insurance which are heavy users of information technology and where even the concept of output is poorly specified 4 whether or not you see computers everywhere some of what they do is not counted in economic statistics examples are consumption on the job convenience better user interface and so forth 5 you don t see computers in the productivity statistics yet but wait a bit and you will this is the analogy with the diffusion of electricity the idea that the productivity implications of a new technology are only visible witlh a long lag 6 you see computers everywhere but in the productivity statistics because computers are not as productive as you think here there are many anecdotes such as failed computer system design projects but there are also assertions from computer science that computer and software design has taken a wrong turn 7 there is no paradox some economists are counting innovations and new products on an arithmetic scale when they should count on a logarithmic scale

altruism and beyond an economic analysis of transfers and exchanges within families and groups 1 introduction 2 altruism transfers and wellbeing 3 the timing of intergenerational transfers an implication 4 an exchange implication of transfers the demonstration effect 5 transfers by migrants a strategic motive for remittances 6 exchange with recognition costs an explanation of migrants performance 7 intrafamilial transfers and exchanges forming and sustaining altruism

jeea fbbva lecture 2019 consumption insurance in networks with asymmetric information evidence from tanzania this paper uses a dataset from tanzania with information on consumption income and income shocks within and across family networks crucially and uniquely it also contains data on the degree of information existing between each pair of households within family networks we use these data to construct a novel measure of the quality of information both at the level of household pairs and at the level of the network we also note that the individual level measures can be interpreted as measures of network centrality we study risk sharing within these networks and explore whether the rejection of perfect risk sharing that we observe can be related to our measures of information quality we show that households within family networks with better information are less vulnerable to idiosyncratic shocks furthermore we show that more central households within networks are less vulnerable to idiosyncratic shocks these results have important implications for the characterisation of the empirical failure of the perfect risk sharing hypothesis and point to the importance of information frictions

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

innovation waves self organized criticality and technological convergence abstract the purpose of this paper is to investigate the evolutionary process of imitation and innovation as a process of searching in a given neighbourhood of firms the spreading of information through neighbourhoods allows firms to acquire knowledge leading to innovation waves followed by imitation as firms attempt to glean information on best practise techniques whilst innovators are temporarily allowed to reap quasi rents the imitative band wagon effect drives the profit rate down to its normal level productivity growth lowers the prices of sectors involved in the process of technological advance causing obsolescence and creative destruction in a schumpeterian sense

spatial growth and industry age between 1970 and 2000 employment growth across u s counties exhibited very different patterns in manufacturing and services whereas manufacturing employment growth was negatively related to initial manufacturing employment across the entire distribution of counties service employment growth was positively related to initial service employment for intermediate sized counties this paper presents a theory to rationalize these facts local sectoral growth is driven by technological diffusion across space and depends on the age of the sector the theory correctly predicts the relation between county employment growth and initial county employment in manufacturing at the turn of the 20th century

the myth of the biotech revolution an assessment of technological clinical and organisational change abstract this paper argues that despite being widely promoted by academics and consultants the empirical evidence does not support the existence of a biotech revolution nor does the data support the widely held expectations that biotechnology is having a revolutionary impact on healthcare or economic development the revolutionary model is therefore a misleading basis for policy making as it over estimates the speed and extent of any changes in productivity or the quality of therapeutics instead the evidence suggests biotechnology is following a well established incremental pattern of technological change and creative accumulation that builds upon rather than disrupts previous drug development heuristics

the incentive value of inventory and cross training in modern manufacturing this paper shows that major components of modern manufacturing processes such as inventory management and cross training play a significant control role in our model workers possess information that is critical to efficient ongoing operations an organizational design that motivates workers to optimally apply this information leverages both the production schedule and worker management communication management s use of these controls results in work in process wip inventory that appears excessive from a pure job scheduling perspective but is optimal when control issues are considered empirical work testing pure job scheduling theories of modern manufacturing practices has yielded mixed results we provide control related interpretations for these empirical findings and also provide novel predictions regarding the link between inventory levels and the nature of operational information asymmetries overall our model highlights the importance of recognizing both control and scheduling issues when analyzing production processes

the economic impact of canadian university r d abstract canadian university research expenditures and those of graduate students produce a gross static economic impact upon the canadian gross domestic product gdp which considerably overestimates the net static impact of university research moreover the net static impact because it keeps constant the economic structure and the productivity of factors of production does not account for the principal beneficial impact of university research the building of human capital and the transfer of knowledge technology all of this leads to an increase in productivity and thus in the size of the gdp this effect is called the dynamic impact this article besides comparing succinctly the gross impact with the net static impact develops a practical method to measure the dynamic impact of university research in a way this method provides another benchmark besides the peer review to judge the relevance of university r d

the place of entrepreneurship in the economics that might have been it is a familiar observation that entrepreneurship is not easily accommodated within the framework of neoclassical economic theory drawing inspiration from an ancient critique of neoclassicism by veblen q j econ 12 4 373 397 1898 this paper attributes the difficulty to the tension between normative accounts of decision making as in mainstream theory and ideas of causation that are standard in the sciences normative theories naturally privilege the conjectured future over the experienced past in the quest for explanatory factors evolutionary theories elucidate instead the mechanisms of cumulative causation veblen that perpetually produce the present from the past entrepreneurship of the innovative schumpeterian kind seizes opportunities that emerge in complex evolving contexts of technological and institutional change a theory that gives due weight to cumulative causation sheds greater light on these processes than prevailing mainstream theory can and that is a key advantage of an evolutionary theory

does africa need a rotten kin theorem experimental evidence from village economies this paper measures the economic impact of social pressure to share income with kin and neighbors in rural kenyan villages the authors conduct a lab experiment in which they randomly vary the observability of investment returns the goal is to test whether subjects reduce their income in order to keep it hidden the analysis finds that women adopt an investment strategy that conceals the size of their initial endowment in the experiment although that strategy reduces their expected earnings this effect is largest among women with relatives attending the experiment parameter estimates suggest that women behave as though they expect to be pressured to share four percent of their observable income with others and substantially more when close kin can observe income directly although this paper provides experimental evidence from a single african country observational studies suggest that similar pressure from kin may be prevalent in many rural areas throughout sub saharan africa

what happens when agent t gets a computer the labor market impact of cost efficient computer adoption this paper offers a model of how computer technology has changed the labor market demonstrating that wage differentials between computer users and non users are consistent with computers first being introduced in high wage jobs following cost efficiency furthermore skill upgrading occurs following a reemphasis on non routine tasks after adoption the model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between users and non users skill upgrading and the changing organization and intensity of work finally the predicted effects on the wage structure are consistent with empirical evidence

motives for household private transfers in burkina faso abstract resource transfers among households have received considerable interest among economists in recent years two of the main reasons for the surge of interest in household transfers are the information on human nature conveyed by transfer behavior and the implication on income redistribution policy that private transfer might have empirical studies however provide mixed results on transfer behavior this is because previous inquiries were confronted with several estimation issues and have focused on data from developed countries where private transfers are already small this paper contributes to the literature on transfer behavior by using a multifaceted econometric approach to examine the motives of household transfers in burkina a low income country with a well documented tradition of gift exchanges the findings suggest that risk sharing is not central to transfers altruistic transfers are apparent for the middle income class but not at low income level the evidence implies that crowding out may be minimal at low income level suggesting that public transfers targeting poor households may be effective

blade runner economics will innovation lead the economic recovery according to schumpeterian theories economic expansions are associated with the introduction of successful new products processes and services while depressions are linked to stagnant periods with few innovations can the economic crisis set in motion in 2008 be explained by the inability to innovate and upgrade production and conversely will an economic recovery require a new stream of innovations drawing on the debate which emerged after the 1970s economic crisis this discussion paper tries to assess whether it is likely that the next long term expansion will be linked to a new stream of innovations while most evidence suggests that icts continue to provide the back bone of economic activities there is the prospect that biotechnology will eventually start to fulfil the promise envisaged over 30 years ago in the film blade runner

justifying the first order approach to principal agent problems it is of interest to know when the incentive compatibility conditio n in principal agent problems can be replaced by the condition that the agent s expected utility be stationary in effort the mirrlees rogerson conditions do not work if the principal can observe more than one observable statistic also the mirrlees rogerson assumption that the distribution function of output is convex in the agent s action is unsatisfactory even in the context of the basi c model it is too restrictive the paper presents a suite of conditio ns that are applicable to the multistatistic case and replaces the objectionable convex distribution function assumption copyright 1988 by the econometric society

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

the short run price performance dynamics of microcomputer technologies abstract models of technology growth are often conceived in terms of long run trends in performance and price because in general short run parameter stability and even the form of the growth function have proved elusive yet short run growth models are arguably more useful for managers and research scientists because the majority of their decisions are concerned with discretionary spending and operations rather than longer run strategic plans and investments our research explores short run growth in microcomputer technologies by specifying growth models and parameter estimates for six commercially important computer technologies over short time periods with weekly data observations were acquired in a homogeneous market limited to a collection time frame of less than two years data was collected at granular weekly intervals with concurrent tests to determine whether parameters were stable over successively longer intervals conversely candidate growth models from longer strategic planning horizons were tested to determine whether they scaled down to operational planning horizons we found that an exponential model of performance to price growth is supported over short time horizons in all but one microcomputer technology nonvolatile ram the exponential model and technology specific parameter estimates that are valid over short horizons were found to accurately scale up to longer planning horizons we expect our results to contribute to more accurate price performance forecasting at the corporate and product level better decision making concerning inventory management capacity utilization lead and lag times in supply chain operations and efficiency of logistics

household allocations and endogenous information the case of split migrants in kenya abstract one of the main elements separating different models of intrahousehold allocations is the household information set this paper tests for the endogeneity of the household information set in a context where household members cannot observe each other easily spousal information in the context of split urban migration in kenya based on unique data it finds that split migrant couples in the nairobi slums invest considerable resources into information acquisition substituting visits monitoring by siblings and budget submissions before remitting comparisons of pre marital search characteristics between current split and joint migrants are consistent with the hypothesis that those anticipating split migration change their marital search behavior to mitigate the consequences of pending imperfect information

the ict electronics question structural change and the rebound effect abstract ict and related electronic appliances consumed 4 of global electrical energy in 2007 growing to 4 7 in 2012 with projections of continued increase in coming decades this is despite an average annual increase in energy efficiency of about 30 in ict electronics throughout the last 5 decades mainstream studies of energy related rebound effects have yet to produce a conceptual framework that adequately encapsulates a unique feature of ict electronics its tendency to induce changes in social practice and socio technical structures this study attempts to fill this gap surveying rebound effect literature it builds on studies which explore transformational change caused by energy efficiency increases it identifies structural changes in business education the military and households caused by energy efficiency increases in ict electronics which lead to a proliferation of ict electronic devices and consequently increased energy consumption it shows the cause and effect logic between energy efficiency and energy consumption in ict electronics and tentatively estimates rebound effects ranging between 115 and 161 in eight diverse empirical examples the history of ict electronics shows that energy efficiency increases inevitably lead to increases in energy consumption hence firm controls on co 2 e emission allowances may offer the best hope of curbing energy consumption and co 2 e emissions in this sector

animal spirits as an engine of boom busts and throttle of productivity growth abstract the news shock literature interprets empirical news shock identifications as signals about future productivity under this view changes in productivity cause changes in expectations i investigate an alternative interpretation whereby changes in expectations cause changes in productivity i present a model where firms adopt the technology of a deterministic frontier and where self fulfilling expectational shocks unleash a frenzy of adoption through which firms increase productivity consistent with the news evidence stock prices and aggregate activity boom yet tfp increases with a lag simulations using i i d expectational shocks yield moments consistent with the data and qualitatively capture both high frequency boom busts and lower frequency fluctuations finally estimating a beaudry portier style vecm on the simulated model output to identify a news shock recovers impulse response functions largely consistent with the beaudry and portier 2006 results

gpt driven endogenous growth seven years after helpman s 1998 book on general purpose technologies gpts there is a dearth of subsequent models early models employed technically complex dynamic optimising techniques which limited further development we present a model in which sustained growth is driven by a succession of gpts that is technically simpler than the early models yet captures stylised facts that were omitted from them ours has diminishing returns to inputs and endogenous incremental technological changes from r d interrupted by the occasional introduction of new gpts gpts are themselves developed endogenously with payoffs that are subject to uncertainty in magnitude and timing

innovation and growth through local and global interaction this paper investigates the research and development activity of heterogeneous and rationally bounded firms the latter conduct this activity through in house research and by collecting information originating in other firms spillovers thus research and development activity owes both to independent searching and to interaction diffusing information we study the conditions under which this idiosyncratic effort yields effects that have either local system wise negligible impacts or cumulate to generate significant aggregate ones in the latter case global effects feed back upon the incentive to innovate and therefore on the strength of local interaction as well as on autonomous research efforts it is these dynamic forces that we model we compare cases in which significant aggregate effects do emerge with cases in which they do not and study their outcome on innovation directed investment and on long term growth

trend breaks long run restrictions and contractionary technology improvements abstract structural vector autoregressions with long run restrictions are extraordinarily sensitive to low frequency correlations recent literature finds that the estimated effects of technology shocks are sensitive to how one treats hours per capita however after allowing for statistically and economically significant trend breaks in productivity results are much less sensitive hours fall when technology improves the issue is that the common high low high pattern of productivity growth and hours i e the low frequency correlation inevitably leads to a positive estimated response the trend breaks control for this correlation this example suggests a practical need for care in using long run restrictions

oligopolistic competition it use for product differentiation and the productivity paradox abstract empirical studies suggest that the huge investment in information technologies it of the past two decades has led to no significant increase in productivity this phenomenon is known as the productivity paradox it has been argued that the paradox might result from oligopolistic competition because of strategic interaction each individual firm might find it profitable to invest in cost reducing it but total investment might then be excessive from the industry s point of view i confirm this view and strengthen it by allowing it investment to be also devoted to product differentiation which makes the productivity paradox more likely the emergence of web based electronic commerce provides an illustration of the forces identified in the model

motives for private transfers over the life cycle an analytical framework and evidence for peru abstract this paper tests for the motives for private income transfers we consider two motives altruism and exchange the question of private transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income using a household survey for peru we find that transfer amounts received increase with recipient pre transfer income which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange we also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits crowd out the incidence of private transfers

optimal incentive schemes in bottleneck constrained production environments this paper analyzes the design of incentives and control measures in a manufacturing setting in the environment we consider the output of one operation serves as the input for a second operation where there is a bottleneck inputs must be processed at both workstations to produce the final output thus high production volume at the first operation does not translate into high benefits to the owner unless the output is subsequently processed at the second workstation this is a familiar context in manufacturing management lawrence and buss 1992 critics such as goldratt 1990 argue that in these situations typical cost accounting efficiency measurements motivate the nonbottleneck operation to produce output beyond the available capacity of the bottleneck resource leading to waste and excess work in process inventories however workers at the nonbottleneck operation can be induced not to overproduce if restricting production is desired by the owner we characterize management accounting practices and incentive arrangements that balance output production at nonbottleneck operations with the input demands of the bottleneck facility

good booms bad booms credit booms usually precede financial crises however some credit booms end in a crisis bad booms and others do not good booms we document that while all booms start with an increase of total factor productivity tfp and labor productivity lp such growth falls much faster subsequently for bad booms we then develop a simple framework to explain this firms finance investment opportunities with short term collateralized debt if agents do not produce information about the collateral quality a credit boom develops accommodatingfirms with lower quality projects and increasing the incentives of lenders to acquire information about the collateral eventually triggering a crisis when the average quality of investment opportunities also grows the credit boom may not end in a crisis because the gradual adoption of low quality projects is not strong enough to induce information about collateral finally we also test the main predictions of the model

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

on the relation between organisational practices and new technologies the role of time based competition this article studies some aspects of organisation choice while explicitly accounting for the fact that firms compete on the product market firms compete by introducing drastic innovations while organisation choice results from a tradeoff between productive efficiency and reactivity we show that the adoption of information technologies and the choice of reactive organisations are complements via an industry level equilibrium effect this view contrasts with the existing literature which emphasises the existence of similar complementarities at the firm level consistently with our model we find that industry level rather than firm level diffusion of information technologies explains firms organisational practices

network structure and the aggregation of information theory and evidence from indonesia abstract we use unique data from over 600 indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation we develop a model of semi bayesian learning on networks which we structurally estimate using within village data the model generates qualitative predictions about how cross village patterns of learning relate to network structure which we show are borne out in the data we apply our findings to a community based targeting program where citizens chose households to receive aid and show that the networks that the model predicts to be more diffusive differentially benefit from community targeting jel d14 d83 d85 i32 o12 z13

does the new economy measure up to the great inventions of the past abstract during the four years 1995 99 u s productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age of 1913 72 accordingly many observers have declared the new economy to be an industrial revolution even more important than the second industrial revolution of 1860 1900 which made the golden age of productivity growth possible this paper dissects the recent productivity revival subtracts out a cyclical component and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector the paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past

growth deceleration and transaction costs a note abstract the basic hypothesis of this essay is that the bureaucratic nature of the planned economies of east europe meant that they were more vulnerable to the rising transaction costs associated with economic development than market economics if true this suggests that these nations revealed a greater deceleration of economic growth than in the market economies of the west empirical evidence is provided to demonstrated that such a phenomenon did in fact occur

origins and pathways of innovation in the third industrial revolution this study examines the factors that shaped the long term evolution of the ict industry in sweden 1950 2013 using a new historical microdatabase on actual innovation output the driving forces and technological interdependencies in the third industrial revolution are chronicled the results of this study support some stylized facts about technological interdependencies in general purpose technologies a closely knitted set of industries have provided positive and negative driving forces for the development of ict innovations the historical evolution of gpts can in this perspective be described as a sequence of development blocks

migration and economic mobility in tanzania evidence from a tracking survey this study explores the extent to which migration has contributed to improved living standards of individuals in tanzania using longitudinal data on individuals the authors estimate the impact of migration on consumption growth between 1991 and 2004 the analysis addresses concerns about heterogeneity and unobservable factors correlated with both income changes and the decision to migrate the findings show that migration adds 36 percentage points to consumption growth during a period of considerable growth in consumption these results are robust to numerous tests and alternative specifications unpacking the findings the analysis finds that moving out of agriculture is correlated with much higher growth than staying in agriculture although growth is always higher in any sector if one physically moves economic mobility is strongly linked to geographic mobility the puzzle is why more people do not move if returns to geographic mobility are high the evidence is consistent with models in which exit barriers are set by home communities through social and family norms that prevent migration of certain categories of people

secular stagnation a supply side view secular stagnation on the supply side takes the form of a slow 1 6 percent annual growth rate of us potential real gdp roughly half the 3 1 percent annual growth rate of actual real gdp realized from 1972 to 2004 this slowdown stems from a sharp decline in the growth rate of aggregate hours of work and of output per hour this paper attributes the productivity growth decline to diminishing returns in the digital revolution that had its peak effect business hardware software and best practices in the late 1990s but has resulted in little change in those methods over the past decade

two sided altruism and signaling abstract when donors and recipients care about each other two sided altruism asymmetry of information about the donor s income or about the donor s altruism leads naturally to a signaling game the desire to signal income or altruism puts upward pressure on transfers

don t tell on me experimental evidence of asymmetric information in transnational households although most theoretical models of household decision making assume perfect information empirical studies suggest that information asymmetries can have large impacts on resource allocation i demonstrate the importance of these asymmetries in transnational households where physical distance between family members can make information barriers especially acute i implement an experiment among migrants in washington dc and their families in el salvador that examines how information asymmetries can have strategic and inadvertent impacts on remittance decisions migrants make an incentivized decision over how much of a cash windfall to remit and recipients decide how they will spend a remittance migrants strategically send home less when their choice is not revealed to recipients recipients make spending choices closer to migrants preferences when the migrants preferences are shared regardless of whether or not the spending choices are revealed to the migrants suggesting that recipients choices are inadvertently affected by imperfect information

risk sharing in private information models with asset accumulation explaining the excess smoothness of consumption we study testable implications for the dynamics of consumption and income of models in which first best allocations are not achieved because of a moral hazard problem with hidden saving we show that in this environment agents typically achieve more insurance than that obtained under self insurance with a single asset consumption allocations exhibit excess smoothness as found and defined by campbell and deaton 1989 we argue that excess smoothness in this context is equivalent to a violation of the intertemporal budget constraint considered in a bewley economy with a single asset we also show parameterizations of our model in which we can obtain a closed form solution for the efficient insurance contract and where the excess smoothness parameter has a structural interpretation in terms of the severity of the moral hazard problem we present tests of excess smoothness applied to u k microdata and constructed using techniques proposed by hansen roberds and sargent 1991 to test the intertemporal budget constraint our theoretical model leads us to interpret them as tests of the market structure faced by economic agents we also construct a test based on the dynamics of the cross sectional variances of consumption and income that is in a precise sense complementary to that based on hansen roberds and sargent 1991 and that allows us to estimate the same structural parameter the results we report are consistent with the implications of the model and are internally coherent

parental altruism and inter vivos transfers theory and evidence this paper uses psid data on the extended family to test whether inter vivos transfers from parents to children are motivated by altruism specifically the paper tests whether an increase by one dollar in the income of parents actively making transfers to a child coupled with a one dollar reduction in that child s income results in the parents increasing their transfer to the child by one dollar this restriction on parental and child transfer income derivatives is derived for the standard altruism model augmented to include uncertainty and liquidity constraints these additional elements pin down the timing of inter vivos transfers the method used to estimate income transfer derivatives takes into account unobserved heterogeneity across families in the degree of altruism the findings strongly reject the altruism hypothesis redistributing one dollar from a recipient child to donor parents leads to less than a 13 cent increase in the parents transfer to the child far less than the one dollar increas

collective invention during the british industrial revolution the case of the cornish pumping engine in this paper we argue that together with individual inventors and firms what robert c allen 1983 has termed as collective invention settings that is settings in which rival firms freely release each other pertinent technical information were also a crucial source of innovation in the industrial revolution period until now this has been very little considered in the literature this paper focuses on one of these cases the cornish mining district in cornwall during the early nineteenth century a notable collective invention setting gradually emerged this case is particularly remarkable because it was capable of generating a continuous and sustained flow of improvements in steam pumping technology which in the end greatly contributed to improve the thermodynamic efficiency of the steam engine in this paper we study in detail the specific economic circumstances that led to the formation of this collective invention setting and we analyses its consequences for the rate of technological innovation

business groups and the natural state abstract recent revisionist accounts of corporate governance in both business history and finance are challenging the tradition narrative associated with berle and means 1932 and chandler 1977 in which the american model of diffuse ownership and coherent diversification is both an inevitable outcome of economic development and perhaps a normative standard for the world to follow this essay is an attempt to rethink that narrative in light of the continued significance of the pyramidal business group as a governance structure around the world i argue that business groups arise in response both to inadequacies in arm s length markets and to the needs of what north et al 2009 call the natural state in this view the quality of markets and the demands of the state are tightly interconnected phenomena such a perspective explains the emergence of business groups in developing countries as well as their persistence even in wealthy and sophisticated polities apart from the u s and the u k in the end moreover i endorse the view that the much discussed and oft misunderstood exceptionalism of the u s in corporate governance arises not only from the sophistication of american markets but also importantly from government policies toward corporate taxation and securities regulation policies that arose from the unique public choice problem posed by the differential effect on the u s of the collapse of globalization during the middle years of the twentieth century

growth cycles and market crashes abstract market booms are often followed by dramatic falls to explain this requires an asymmetry in the underlying shocks a straightforward model of technological progress generates asymmetries that are also the source of growth cycles assuming a representative consumer we show that the stock market generally rises punctuated by occasional dramatic falls with high risk aversion bad news causes dramatic increases in prices bad news does not correspond to a contraction of existing production possibilities but to a slowdown in its expansion this economy provides a model of endogenous growth cycles in which recoveries and recessions are dictated by the adoption of innovations journal of economic literature classification numbers o40 g12 o41 o30

volatility and slow technology diffusion abstract i study the effects of uncertainty on technology adoption and thereby on volatility and growth i present an analytically tractable model in which i uncertainty about the returns to adoption delays technology diffusion and ii the mean and volatility of output growth are jointly determined in equilibrium i then test the key predictions of the model by studying the introduction of three major information and communication technologies icts computers internet and cell phones i find that countries with more volatile growth rates of real gdp per capita have higher time adoption lags and lower average growth as predicted by the model

does innovation cause stock market runups evidence from the great crash this article examines the stock market s changing valuation of corporate patentable assets between 1910 and 1939 it shows that the value of knowl edge capital increased significantly during the 1920s compared to the 1910s as investors responded to the quality of technological inventions innovation was an important driver of the late 1920s stock market runup and the great crash did not reflect a significant revaluation of knowledge capital relative to physical capital although substantial quantities of influential patents were accumulated during the post crash recovery high technology firms did not earn significant excess returns over low technology firms for most of the 1930s

economic growth and the transition from traditional to modern energy in sweden we examine the role of substitution from traditional to modern energy carriers and of differential rates of innovation in the use of each of these in economic growth in sweden from 1850 to 1950 we use a simple growth model with a nested ces production function and exogenous factor augmenting technological change and carry out a counterfactual simulation based on the econometric results even though the rate of technical change was higher for modern energy innovation in the use of traditional energy carriers contributed more to growth between 1850 and 1890 since the cost share of traditional energy was so much larger than that of modern energy in that period however after 1890 we find that modern energy contributed much more to economic growth than traditional energy but increasingly labor augmenting technological change became the most important single driver of growth

path dependence and the korean keyboard abstract this paper recounts the evolution of the korean keyboard as a case in which the disadvantages of the inherited standard turn into a nonissue with the advancement of auxiliary technologies the persistence of an inherited standard when a superior alternative is available is usually regarded as market failure however if the transition costs to the new standard are such that the net gains from the transition are insufficient the situation is unfortunate but not market failure the situation may change over time if the net gain from the alternative standard increases or transition costs to new alternative decrease or both the situation turns into one in which entrepreneurs can profit by making the transition where appropriate an institutional reform may lower transition costs substantially this paper suggests an additional possibility of technological changes that make the transition unnecessary in the case of the korean keyboard changes in auxiliary technologies have rendered the disadvantages of the inherited standard innocuous the case provides a cautionary tale against the temptation to drastically alter a seemingly hopelessly inferior inherited standard the lesson of the korean keyboard applies to japanese and chinese keyboards with even greater force

the vanishing hand the changing dynamics of industrial capitalism alfred chandler s portrayal of the managerial revolution of the late nineteenth and early twentieth centuries does not extend well into the late twentieth century when widespread vertical disintegration began replacing the classical multi unit managerial enterprise this paper attempts to explain the new economy in a manner consistent with chandler by providing an enlarged theoretical account of industrial evolution in this account clusters of chandlerian firms appeared as a temporary episode within a larger smithian process of the division of labor

moving out of poverty in tanzania evidence from kagera abstract this paper uses linked qualitative and quantitative data to explore the growth trajectories of matched households in the kagera region of tanzania finding that agriculture and trade provided the two main routes out of poverty the interplay between initial conditions shocks networks and experiences of life beyond their village determine whether a person moves out of poverty in the following decade

striving for a large market evidence from a general purpose technology in action several scholars have tried to focus on growth accounting of specific examples of general purpose technologies gpts but what are the factors that might make a general purpose technology succeed or fail once the invention has been triggered this paper is a preliminary answer to this question and attempts to study gpts from an ex ante perspective trying to understand what is the behaviour and performance of the producer firms and what the factors are that can favour or hamper their diffusion in the application sectors the paper follows a historical perspective on a control technology introduced in the last few decades by a silicon valley start up company

cleaning house the impact of information technology monitoring on employee theft and productivity this paper examines how firm investments in technology based employee monitoring impact both misconduct and productivity we use unique and detailed theft and sales data from 392 restaurant locations from five firms that adopt a theft monitoring information technology it product we use difference in differences models with staggered adoption dates to estimate the treatment effect of it monitoring on theft and productivity we find significant treatment effects in reduced theft and improved productivity that appear to be primarily driven by changed worker behavior rather than worker turnover we examine four mechanisms that may drive this productivity result economic and cognitive multitasking fairness based motivation and perceived increases of general oversight the observed productivity results represent substantial financial benefits to both firms and the legitimate tip based earnings of workers our results suggest that employee misconduct is not solely a function of individual differences in ethics or morality but can also be influenced by managerial policies that can benefit both firms and employees this paper was accepted by serguei netessine operations management

analyzing the relationships between information technology inputs substitution and national characteristics based on ces stochastic frontier production models abstract this research examines four interrelated issues at the country level the value of information technology it inputs substitution and complement the complementarity phenomenon created by it and national characteristics and the productivity paradox jointly and critically from a global perspective using the so called productive efficiency as the performance measure to that end we develop the three factor constant elasticity of substitution ces stochastic production frontier model and apply it to a set of panel data from 15 countries over the period 1993 2003 along with the traditional two factor ces models within the one and two equation frameworks in the two equation setting six national characteristics are selected as the contributing factors of the productive efficiency the findings include i the value of it as measured by the productive efficiency is duly recognized ii the productivity paradox is found to be absent from the production process in a majority of developed and developing countries considered rejecting the existing argument that the paradox exists only in developing economies but does not exist in developed countries however the developed countries have used it capital in their production systems more productively efficiently than the developing nations iii traditional capital non it capital traditional labor and it capital are not pairwise substitutable contrary to the notion that they are pairwise substitutable at the firm level iv constant returns to scale as commonly assumed are not supported by the data v different national characteristics affect a country s output represented by gross domestic product or gdp and its productive efficiency differently and vi the complementarity phenomenon is observed in most of the countries developed and developing under study

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s

asymmetry of information within family networks this paper studies asymmetry of information and transfers within a unique data set of 712 extended family networks from tanzania using cross reports on asset holdings we construct measures of misperception of income among all pairs of households belonging to the same network we show that there is significant asymmetry of information and no evidence of major systematic over evaluation or under evaluation of income in our data although there is a slight over evaluation on the part of migrants regarding non migrants we develop a static model of asymmetric information that contrasts altruism pressure and exchange as motives to transfer the model makes predictions about the correlations between misperceptions and transfers under these competing explanations testing these predictions in the data uncovers the active role played by the recipient our findings suggest that the recipient sets the terms of the transfers either by exerting pressure to give on the donor or by holding the bargaining power during the exchange of services with the donor