Is growth of knowledge subject to diminishing returns? Are tomorrow’s opportunities more or less than those of the past? Have the important discoveries already been made? When new ideas come about, do they spurn out newer and greater ideas? Wouldn’t new ideas and an increase in knowledge lead to a greater speed of growth? Or do ideas and knowledge sort of get in the way, like patent-races and people stepping on each other toes to get ahead.
These were the question of Romer and a challenger, Charles I. Jones. A Harvard graduate who argued that while R&D added to many things, it did not speed up growth rates. Growth rates, despite a growth of knowledge, have remained relatively constant for 100 years.
While Romer’s assumptions were contrary to the Solow model – Jones focused on the implications of R&D and how to measure if there was too little or too much of it. Jones went on to create tons of research and articles and with Robert Hall he created a new growth accounting framework and took over the NBER program on growth fluctuations with Peter Klenow.
A for Tom.
ReplyDeleteI wouldn't call Jones a challenger to Romer. He's just doing what academics do.
Tom is missing Jones' important metaphors: 1) does technological growth accelerate because we are "standing on shoulders", or does it diminish because we are "stepping on toes" of others doing similar work?
Jones' work tends to find that the "stepping on toes" effect is stronger, otherwise growth would be accelerating a lot faster than it is.
BTW: Jones wrote the book I used in this class before switching to Barro.