Growth volatility and technical progress: a simple rent-seeking model
Charles Ka-Yui Leung
Sam Hak Kan Tang
Recent empirical evidence demonstrates that a higher level of technical progress is associated with a lower level of growth volatility and higher expected economic growth. This paper builds a simple growth model which combines the insights of Angeletos and Kollintzas (2000) and Tse (2000, 2001, 2002) with endogenous productivity growth and rent-seeking behavior to account for these stylized facts. Our model also complements the literature that focuses on the heterogeneity of different agents. Future research directions are also discussed.
volatility of economic growth, technical progress, rent-seeking, stabilization policy, institution.
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