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Knowledge Growth and the Allocation of Time

Author(s): Lucas, Robert E; Moll, Benjamin

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Abstract: We analyze a model economy with many agents, each with a different productivity level. Agents divide their time between two activities: producing goods with the production-related knowledge they already have and interacting with others in search of new, productivity-increasing ideas. These choices jointly determine the economy’s current production level and its rate of learning and real growth. We construct the balanced growth path for this economy. We also study the allocation chosen by an idealized planner who takes into account and internalizes the external benefits of search. Finally, we provide three examples of alternative learning technologies and show that the properties of equilibrium allocations are quite sensitive to two of these variations.
Publication Date: Feb-2014
Citation: Lucas, Robert E, Moll, Benjamin. (2014). Knowledge Growth and the Allocation of Time. Journal of Political Economy, 122 (1), 1 - 51. doi:10.1086/674363
DOI: doi:10.1086/674363
ISSN: 0022-3808
EISSN: 1537-534X
Pages: 1 - 51
Type of Material: Journal Article
Journal/Proceeding Title: Journal of Political Economy
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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