Some 200 people attended the session of the 1996 conference titled, "New Growth Theory and Economic History: Match or Mismatch." The session featured three speakers; Joel Mokyr, Paul Romer, and Martin Weitzman. Mokyr spoke first, representing the viewpoint of economic historians and referencing the work of English economist Nicholas Crafts, which questioned the reality of the industrial revolution. Romer followed with his presentation. The session was closed with remarks from Weitzman, who offered a viewpoint somewhere between the old and new theories of growth.
Romer's remarks were based on his 1990 paper "Endogenous Technical Change." The paper and Romer's theory are based on the use of a mathematical function to define the growth of knowledge. Though objection to the use of new equations often exists, Romer defends that such theories "...take all the complicated information we have about the world and organize it into (a) kind of hierarchical structure." The "old" growth theory model accounts for technology in addition to the conventional economic inputs of capital, labor, and human capital. It defines technology as publicly available goods and private goods. Romer's "new" growth theory breaks down the inputs into two categories: instructions and materials. Instructions are seen in his theory not to be public and private, but non-rival and rival- a topic introduced in Tom's January 24th post. Growth results from the spreading and improvement of non-rival ideas, and their use in transforming rival goods.
A for Jim. Again ... too long ... you're not writing the book.
ReplyDeleteTwo hundred people is huge for a session at the AEA!
I would also add that Romer's vision is that technology (in addition to goods and services) is one of the outputs of the economy - one that we might be getting better at. Earlier (and simpler) models just sort of assumed that technological advance happened on its own.