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Ensayos sobre POLÍTICA ECONÓMICA

Print version ISSN 0120-4483

Abstract

POSADA, Carlos Esteban. The opportunity cost of technical change, economic growth and the Colombian case 1925-2012. Ens. polit. econ. [online]. 2015, vol.33, n.77, pp.149-167. ISSN 0120-4483.  http://dx.doi.org/10.1016/j.espe.2015.04.002.

This document presents a dynamic general equilibrium model with endogenous technical change. The model is used to guide an interpretation of the Colombian case for the period 1925-2012. The main conclusions are the following: the steady state technical change and economic growth rates depend upon a balance between the individual benefit for innovation and its opportunity cost. Random shocks causing a gap between the steady state technical change rate and its effective level have a permanent effect on the product level in the opposite direction to the prediction by the Cass-Koopmans-Ramsey model. After 1930, in Colombia, fiscal and foreign trade policies have generated permanent negative effects on output. According to the paper's model the channel has been the promotion of diversion of productive resources towards the present production at the expense of innovation activities.

Keywords : Endogenous technical change; Benefit and opportunity cost of the technical change; Economic growth; Colombian economy.

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