Publication details for Prof Guido CozziCozzi, G., Giordani, P.E. & Zamparelli, L. (2007). The refoundation of the symmetric equilibrium in Schumpeterian growth models. Journal of Economic Theory 136(1): 788-797.
- Publication type: Journal papers: academic
- ISSN/ISBN: 0022-0531
- DOI: 10.1016/j.jet.2006.10.006
- Keywords: R&D-driven growth models, Indeterminacy, Ambiguity, ε-contamination.
- View online: Online version
- Durham research online: DRO record
Author(s) from Durham
We provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical R&D-driven growth models. We argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research: hence, the problem of the allocation of R&D investment across sectors is indeterminate. By introducing an “ε-contamination of confidence” in the expected distribution of R&D investment, we prove that the symmetric structure of R&D investment is the unique rational expectations equilibrium compatible with ambiguity-averse agents adopting a maxmin strategy.
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