| By: |
Chu, Angus C.;
Cozzi, Guido;
Furukawa, Yuichi;
Liao, Chih-Hsing |
| Abstract: |
This study introduces automation into a Schumpeterian model to explore the
different effects of R&D and automation subsidies. R&D subsidy increases
innovation and decreases the share of automated industries with an overall
inverted-U effect on economic growth. Automation subsidy decreases innovation
and increases the share of automated industries also with an inverted-U effect
on growth. Calibrating the model to US data, we find that the current level of
R&D (automation) subsidy is above (below) the growth-maximizing level.
Simulating transition dynamics, we find that changing R&D (automation) subsidy
to its growth-maximizing level causes a welfare gain of 3.8% increase in
consumption. |
| Keywords: |
automation, innovation, economic growth |
| JEL: |
O3 O4 |
| Date: |
2018–08 |
| URL: |
https://d.repec.org/n?u=RePEc:pra:mprapa:88276 |