The Refoundation of the Symmetric Equilibrium in Schumpeterian Growth Models
Title: The Refoundation of the Symmetric Equilibrium in Schumpeterian Growth Models
Publisher: Academic Press Inc Elsevier Science
Citation: Journal of Economic Theory, 2007, 136, 1, 788-797
We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By introducing an ,-contamination of confidence in the expected distribution of R&D investment, we prove that the symmetric structure of R&D investment is the unique rational expectations equilibrium compatible with ambiguity-averse agents adopting a maxmin strategy. (C) 2006 Elsevier Inc. All rights reserved.
Subject: R&D-driven growth models; indeterminacy; ambiguity; epsilon-contamination
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