2017/32 | LEM Working Paper Series | ||||||||||||||||
Endogenous growth and global divergence in a multi-country agent-based model |
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Giovanni Dosi, Andrea Roventini and Emanuele Russo |
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Keywords | |||||||||||||||||
Endogenous growth, structural change, technology-gaps, global divergence, absolute, advantages, agent-based models.
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JEL Classifications | |||||||||||||||||
F41, F43, O4, O3
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Abstract | |||||||||||||||||
In this paper we present a multi-country, multi-industry agent-based
model investigating the different growth patterns of interdependent
economies. Each country features a Schumpeterian engine of endogenous
technical change which interacts with Keyneasian/Kaldorian demand
generation mechanisms. National growth trajectories are driven by
firms’ accumulation of technological knowledge, which in turn also
leads to emergent specialization patterns in different
industries. Interactions among economies occur via trade flows,
stemming from the competition of firms in international
markets. Simulation results show the emergence of persistent income
divergence among countries leading to polarization and club
formation. Moreover, each country experiences a structural
transformation of its productive structure during the development
process. Such dynamics results from firm-level virtuous (or vicious)
cycles between knowledge accumulation, trade performances, and growth
dynamics. The model accounts for a rich ensemble of empirical
regularities at macro, meso and micro levels of aggregation.
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