A comment on innovation with multiple equilibria and "The environment and directed technical change"

Abstract

The framework used to endogenise technology growth by Acemoglu et al. (2012) can exhibit increasing returns to research and hence multiple equilibria, including an unstable interior equilibrium. This paper discusses several selection methods of determining which equilibrium applies. Alternative methods can produce substantially different results when the elasticity of substitution between clean and dirty inputs is high. (JEL O33, O44, Q54, Q56, Q58). Show more