economic growth and business cycles the labor supply decision with two types of technological progress经济增长和经济周期的劳动力供给决策两种类型的技术进步.pdfVIP

Modern Economy, 2011, 2, 301-307 doi:10.4236/me.2011.23033 Published Online July 2011 (http://www.SciRP.org/journal/me) Economic Growth and Business Cycles: The Labor Supply Decision with Two Types of Technological Progress Philip E. Graves Department of Economics , University of Colorado Boulder, Boulder, USA E-mail : gravesp@ Received February 7, 2011; revised April 2, 2011; accepted April 16, 2011 Abstract An informal model is described that leads to multiple macroeconomic equilibria as a consequence of random variation in the relative amounts of technological change for new and existing goods. The novel observation is that the rate of introduction and market penetration of new goods (sometimes called product innovation ) vis-à-vis technological advance for existing goods (sometimes called process innovation ) importantly affects the labor supply decision. A relatively rapid influx of new goods will generally increase labor supply, while relatively more technological advance for existing goods will reduce labor supply to the market. These im- pacts are seen to provide insights into Rostow’s stages of growth. Short run variations in the relative impor- tance of the two types of technological change are seen to imply unpredictable business cycle behavior of the type we observe. The welfare implications of national income accounting that fails to consider changes in leisure are discussed. Keywords: Labor Supply, Macroeconomics, Business Cycles, Technological Change, New Goods Versus Existing Goods, National Income Accounting 1. Introduction the development and growth process is not smooth but rather a