Endogenous Growth, Backstop Technology Adoption and Optimal Jumps

Simone Valente

No 09/104, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We study a two-phase endogenous growth model in which the adoption of a backstop technology (e.g. solar) yields a sustained supply of essential energy inputs previously obtained from exhaustible resources (e.g. oil). Growth is knowledge-driven and the optimal timing of technology switching is determined by welfare maximization. The optimal path exhibits discrete jumps in endogenous variables: technology switching implies sudden reductions in consumption and output, an increase in the growth rate, and instantaneous adjustments in saving rates. Due to the positive growth e¤ect, it is optimal to implement the new technology when its current consumption bene.ts are substantially lower than those generated by old technologies.

Keywords: Backstop technology; Discrete jumps; Endogenous growth; Exhaustible resources; Optimal Control (search for similar items in EconPapers)
JEL-codes: O33 Q32 Q43 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2009-02
New Economics Papers: this item is included in nep-cse, nep-dge, nep-ene, nep-env and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: ENDOGENOUS GROWTH, BACKSTOP TECHNOLOGY ADOPTION, AND OPTIMAL JUMPS (2011)
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