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Creating a Learning SocietyA New Approach to Growth, Development, and Social Progress$
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Joseph Stiglitz and Bruce Greenwald

Print publication date: 2014

Print ISBN-13: 9780231152143

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231152143.001.0001

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Long-Term Growth and Innovation

Long-Term Growth and Innovation

(p.319) Chapter Ten Long-Term Growth and Innovation
Creating a Learning Society

Joseph E. Stiglitz

Bruce C. Greenwald

Columbia University Press

Both finite-period and steady-state models should be viewed only as tools to help us think through the complexities of multiperiod dynamics. The essential insights of the finite-period models in Chapters 7, 8, and 9 are valid in much more general models—for instance, the notions that monopolies will take into account learning benefits in their production decisions; competitive firms will not; neither will take into account learning externalities; and that accordingly, there is a role for government intervention, to encourage sectors with greater learning spillovers. This chapter explores special cases in which a steady state exists. It structures the cases so that whatever is optimal at time t is optimal at time t + 1; in that case, policy is directed at choosing the optimum steady state. In all of the cases, the central result is that it is optimal to permanently impose distorting taxes to encourage production in the learning sector.

Keywords:   learning models, finite-period models, steady-state models, distorting taxes, production

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