The Department of Economics Macroeconomics Seminar Series presents

"Knowledge, Growth and Allocation of Time"
with Benjamin Moll, Assistant Professor of Economics & International Affairs, Princeton University

Wednesday, January 30, 2013
2:00-3:20 p.m.
Social Science Plaza B, Room 3218

Moll analyzes a model economy with many agents, each with a different productivity level. Agents divide their time between two activities: producing goods with the production-related knowledge they already have, and interacting with others in search of new, productivity-increasing ideas. These choices jointly determine the economy’s current production level and its rate of learning and real growth. He constructs the balanced growth path for this economy, thereby obtaining a theory of endogenous growth that captures in a tractable way the social nature of knowledge creation. He shows, for example, that a fatter right tail of the initial productivity distribution leads to higher individual search effort and higher long-run growth. He also studies the allocation chosen by an idealized planner who takes into account and internalizes the external benefits of search, and tax structures that implement an optimal solution. Finally, he provides three examples of alternative learning technologies and show that the properties of equilibrium allocations are quite sensitive to these variations. An increase in “limits to learning”, for example, results in decreased individual search effort particularly for low productivity types, a lower growth rate, higher inequality and decreased social mobility.

For further information, please contact Gloria Simpson, simpsong@uci.edu or 949-824-5788.