Research and development (Ramp;D) is a key determinant of long run productivity and welfare. A central issue is whether a decentralized economy undertakes too little or too much Ramp;D. We develop an endogenous growth model that incorporates parametrically four important distortions to Ramp;D:...

We embed the microeconomic decisions associated with investment under uncertainty, capacity utilization, and machine replacement in a general equilibrium model based on putty-clay technology. In the presence of irreversible factor proportions, a mean-preserving spread in the productivity of...

We consider a neoclassical interpretation of Germany and Japan's rapid postwar growth that relies on a catch-up mechanism through capital accumulation where technology is embodied in new capital goods. Using a putty-clay model of production and investment, we are able to capture many of the key...