Publications - Working Papers IER SAS

The paper examines theoretical implications of time-consuming production on economic growth based on technological change. Inspired by Austrian theory of capital we build a model of technological change in which various stages of production are formalized as a sequence of CES-production functions. We assume one R&D sector. Successful research consists in invention of new stages of production. Short-run equilibriums when number of stages of production is constant as well as long-run equilibriums are solved. We conclude that endogenous growth is not possible within a simple framework. Modifications of the model allowing for endogenous growth, namely production-accelerating technological progress, are proposed.