Isabel Almudi

A Formal Discussion of the Sarewitz-Nelson Rules

ABSTRACT In this paper, we formally discuss the Sarewitz-Nelson rules for technological fixes (SN-rules). In their original form, the SN-rules were formulated from an implicit theoretical framework such that they define a broad technology assessment heuristic. This formulation has advantages and disadvantages. In this work, we propose that it is possible to make advances in the interpretation and use of the SN-rules, if we formally consider them as a procedure for technology screening, integrated within a wider process of technology choice and policy-making. This conception helps us to assess the nature and applicability of the SN-rules in different contexts, and allows us to position them as a contribution to the economic theory of technology policy.

The Economics of Utopia: A Co-Evolutionary Model of Ideas, Citizens and Civilization

We propose a new history-friendly approach to evolutionary socio-economic dynamics based around competition between five ‘utopias’, as central ideas about which to order society: capitalism, socialism, democracy, nature, and nationalism (Montgomery and Chirot 2015). In our model, citizens contribute economic resources to their preferred utopia, and societal dynamics are explained as a co-evolutionary process between these competing utopias. Civilization emerges with competitive balance between these ideas, maximized when no one utopia dominates. We calibrate the model on a study of socio-economic and political change in the US from the 1960s-present. We cover such episodes as the outbreak of civil rights/pro-democracy movements in the 1970s, the rise of neo-liberalism in the 1980s, and the channels through which America engendered an ‘age of fracture’. Further applications for empirical and theoretical research are suggested.

Absorptive capacity of demand in sports innovation

ABSTRACT We propose a stylized and tractable neo-Schumpeterian model of sectorial transformations in which demand-side knowledge constraints inhibit innovation diffusion and industrial change, causing structural instability. Evolutionary competition in the model implies that innovation can overshoot the absorptive capacity of demand, leading to a slowdown in sectorial dynamism and even to structural collapse. Closed-form analytical results prove the existence of a unique stationary state in the dynamic model that is (globally) asymptotically stable. We show how the dynamic paths and the stationary rest-point depend on the trade-off between innovation and demand absorptive capacity parameters. To illustrate the plausibility and relevance of our results, we examine the Australian windsurfing industry in which diminished demand absorptive capacity (in the terms of the model) was a factor underlying sectoral collapse. We discuss how development of absorptive capacity of demand presents a collective action problem for an industry sector, and the role of demand-side factors as constraints in industry and innovation policy.

An Evolutionary Growth Model with Banking Activity

In this paper, we propose an evolutionary growth model in which an innovative production sector interacts with a simplified banking sector. We explore the relationships between long-term sources of growth (technological change), and short-term/mid-term factors (such as price dynamics and interest rates). The model suggests new explanations for the endogenous emergence of sharp crises with profound effects in the long run. An interesting aspect of the model is that these crises appear in a strictly private economy, in which everything produced is sold, there are no government distortions, and there are no exogenous shocks. The crises emerge from the interactions between uneven innovation rates and market reactivity. In fact, high reactivity in financial markets can amplify the (initially small) effects of innovative competition, leading to a destabilization of economic growth. Drawing on the model results we suggest some policy implications.

Rethinking Macroeconomic Policy within a Simple Dynamic Model: Simple Dynamic Model to Rethink Standard Policy

We propose a simple macro‐dynamic model to rethink standard policy prescriptions. Our model includes exogenous growth, endogenous capital accumulation and debt, demand‐driven production with a non‐linear IS curve, a dynamic Phillips curve, and fiscal and monetary policy instruments. It has multiple steady states with different stability properties, and it is analytically tractable to a significant extent. We complete the analytical results with simulations. We find alternative growth patterns, endogenous fluctuations, and demand‐driven level effects even in the long‐run. For certain steady states the model shows saddle‐path type instabilities, which lead us to reflect on fiscal and monetary policy standards.

The Evolutionary Political Economy of Climate Change: Utopia Competition

We present a new evolutionary political economy approach to the study of long-run dynamics of socio-economic evolution and change based on a co-evolutionary model of differential citizen contributions to competing ‘utopias’ – market, statism, and environmentalism. We model the transition to a sustainable economy as an (plausible) outcome of ‘utopia competition’ in which environmentalism manages to coexist with market, while state fundamentalism vanishes. Our simulation-based framework suggests that the contributions of citizens to the battle of ideas – both the distribution within a utopia, and the interaction between different utopias – are crucial factors in explaining the dynamics of the transition to a sustainable economy.

Rethinking Macroeconomic Policy within a Simple Dynamic Model

We propose a simple macrodynamic model to rethink some standard policy prescriptions. Our model includes exogenous growth, endogenous investment, demand-driven production and employment, a dynamic Phillips curve, and fiscal and monetary policy instruments. The model has multiple steady states with different stability properties, and it is analytically tractable to a significant extent. Given the nonlinear nature of the model, we complete the analytical results with simulations. The model generates different growth patterns, endogenous fluctuations, and demand-driven level effects even in the long-run. It also reveals saddle-path type instabilities in which seemingly stable paths suddenly give way to increasing volatility. These results lead us to reflect on fiscal and monetary policy standards, and suggest new interpretations for the “Great Recession”.