Real-world examples include such "input" innovations as the steam engine,the airplane,and the computer,whose use made possible new methods of production in mining, transportation,and banking, with economy- wide effects. An innovation need not, however, be as revolutionary as these examples,but might consist instead of a new generation of intermediate good, similar to the old one.
Specifically,use of the new intermediate good increases the productivity parameter A in (2.1) by the factor y > 1. There are no lags in the diffusion of technology.4The most modern intermediate good is always produced,so that:
Real-world examples include such "input" innovations as the steam engine,the airplane,and the computer,whose use made possible new methods of production in mining, transportation,and banking, with economy- wide effects. An innovation need not, however, be as revolutionary as these examples,but might consist instead of a new generation of intermediate good, similar to the old one.Specifically,use of the new intermediate good increases the productivity parameter A in (2.1) by the factor y > 1. There are no lags in the diffusion of technology.4The most modern intermediate good is always produced,so that:
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