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CEP discussion paper
An R&D-Based Model of Multi-Sector Growth
L. Rachel Ngai and Roberto M. Samaniego
December 2006
Paper No' CEPDP0762:
Full Paper (pdf)

JEL Classification: D24; D92; O31; O41

Tags: endogenous technical change; multisector growth; fertility of knowledge; total factor productivity; r&d intensity; investment-specific technical change

We develop a multi-sector general equilibrium model in which productivity growth is driven by the production of sector-specific knowledge. In the model, we find that long run differences in total factor productivity growth across sectors are independent of the parameters of the knowledge production function except for one, which we term the fertility of knowledge. Differences in R&D intensity are also independent of most other parameters. The fertility of knowledge in the capital sector is central to the growth properties of the model economy.