Vested Interests: In a Positive Theory of Stagnation and Growth
1993 (English)Report (Other academic)
We study a positive theory of stagnation and growth aimed at understanding the large variations in growth outcomes across actual economies. The theory points to the fundamental role played by vested interests in determining policies which are key to the growth process: some agents seek to prevent the adoption of new technologies. We develop a model of technology adoption, and show how technological innovation may sow the seeds of its own destruction. In particular, we find that the equilibrium is characterized by a long cycle of stagnation and growth. Over this cycle, incumbents are phased out of the economy will new innovation occur. In formalizing our theory we make a methodological contribution by characterizing dynamic voting equilibria when voters must forecast the effects of different current policies on future prices and policy outcomes.
Place, publisher, year, edition, pages
Stockholm: IIES , 1993. , 47 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 547
IdentifiersURN: urn:nbn:se:su:diva-41866OAI: oai:DiVA.org:su-41866DiVA: diva2:338053