Abstract
This paper presents a model displaying sustained growth in output resulting from the accumulation of knowledge. The accumulation of knowledge is endogenous, determined by a level of study chosen by optimizing agents. Although knowledge can be owned and sold, its equilibrium price is below its value to future production, implying that the equilibrium suffers from a Paretononoptimal underaccumulation of knowledge. These features of the equilibrium result from two special properties of knowledge: (i) an agent's stock of knowledge is undiminished by the transmission of that knowledge to someone else and (ii) the transmission of knowledge cannot be fully observed.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 3-24 |
| Number of pages | 22 |
| Journal | Journal of Monetary Economics |
| Volume | 30 |
| Issue number | 1 |
| DOIs | |
| State | Published - Oct 1992 |