Modeling the Transition to a New Economy: Lessons from Two Technological Revolutions
Atkeson, Andrew, and
Patrick J. Kehoe. 2007. "Modeling the Transition to a New Economy: Lessons from Two Technological Revolutions."
American Economic Review,
Many view the period after the Second Industrial Revolution as a paradigm of a
transition to a new economy following a technological revolution, including the
Information Technology Revolution. We build a quantitative model of diffusion and
growth during transitions to evaluate that view. With a learning process quantified
by data on the life cycle of US manufacturing plants, the model accounts for the key
features of the transition after the Second Industrial Revolution. But we find that
features like those will occur in other transitions only if a large amount of
knowledge about old technologies exists before the transition begins. (JEL L60,
N61, N62, N71, N72, O33)
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Kehoe, Patrick J.