Three Essays on Endogenous Technology and Economic Growth

This thesis contains three chapters that endeavour to provide valuable insights into the importance of endogenous technology on growth. Chapter 1 studies a Real Business Cycle model that focuses on two regions - the technology creation and the technology adoption regions. The model examines the effect of technology creation or R&D shocks on the economic growth of different regions, and how macroeconomic variables respond to the shock. Positive technology shocks create new technologies and boost output growth. Adopting technologies from one region can benefit another region’s economy. However, since the shock is temporary, variables will eventually converge to their steady states. Chapter 2 describes a New Keynesian DSGE model that analyses the interaction between monetary policy and economic variables’ volatility. The model suggests that monetary policy can impact one region and other regions through various channels, such as the technology adoption channel. The study recommends that monetary authorities in developing regions monitor this channel to support growth and stabilise economic volatility. The policy in advanced regions can also impact entrepreneurs in developing regions through the technology adoption channel, and firm owners should understand the effect of this and other transmission channels to manage their businesses smoothly in the long run. Chapter 3 highlights the empirical importance of R&D and technology transfer in driving economic growth and boosting productivity. The study demonstrates that R&D is essential for productivity growth as it promotes innovation and facilitates technology transfer, especially in developing countries that need to catch up on technological advancements. Productivity can also increase through international trade and human capital. International trade can bring new markets, technologies, and resources, while human capital is essential for a country’s growth and development. These findings emphasise the need to invest in technology transfer and innovation to boost economic growth.