A MULTISECTORAL GENERAL EQUILIBRIUM-MODEL OF SCHUMPETERIAN GROWTH ANDFLUCTUATIONS

This paper builds a dynamic multisectoral general equilibrium model of Schumpeterian growth and fluctuations based on the endogenous introdu ction of new products. The set of technological opportunities determin es the degree of product- quality upgrading and consists of breakthrou ghs and improvements the latter exhibiting diminishing returns. If the degree of diminishing returns to technological improvements is low, t hen there is no steady-state equilibrium but cycles of breakthroughs a nd improvements. We analyze two symmetric stable patterns of innovatio n which generate endogenous cycles and growth. There is a negative cor relation between the duration of each cycle and the long-run growth tr end.