Volatility and slow technology diffusion

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2 Scopus citations

Abstract

I study the effects of uncertainty on technology adoption and thereby on volatility and growth. I present an analytically-tractable model in which: (i) uncertainty about the returns to adoption delays technology diffusion; and (ii) the mean and volatility of output growth are jointly determined in equilibrium. I then test the key predictions of the model by studying the introduction of three major information and communication technologies (ICTs)—computers, internet, and cell phones. I find that countries with more volatile growth rates of real GDP per capita have higher time adoption lags and lower average growth, as predicted by the model.

Original languageEnglish (US)
Pages (from-to)18-37
Number of pages20
JournalEuropean Economic Review
Volume96
DOIs
Publication statusPublished - Jul 1 2017

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Keywords

  • Economic growth
  • Real options
  • Technology adoption
  • Uncertainty
  • Volatility

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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