ENDOGENIZING TECHNOLOGICAL-PROGRESS - THE MESEMET MODEL

This paper endogenizes technology and human capital formation in the M ESEM model that was developed by van Sinderen (Economic Modelling, 199 3, 13, 285-300). Tax allowances for private R & D expenditures and pub lic expenditures on both education and R & D are effective instruments to stimulate economic growth. Simulations with respect to market clea ring, the importance of supply-side elements and key parameters (such as the magnitude of spillovers and substitution elasticities) reveal t hat tax allowances for private R & D are the most robust instrument to increase economic growth through the accumulation of knowledge, Contr ary to other studies that find that technology policies typically redu ce employment, we find that overall employment rises.