Koren, Miklos; Tenreyro, Silvana - London School of Economics (LSE) - 2007
diversification. Production makes use of different input varieties, which are subject to imperfectly correlated shocks. Technological … progress takes the form of an increase in the number of varieties, raising average productivity. In addition, the expansion in … the number of varieties in our model provides diversification benefits against variety-specific shocks and it can hence …