TITLE:
The Equilibrium Allocation of Creative Capital to R&D in a Dynamic Creative Region
AUTHORS:
Amitrajeet A. Batabyal, Hamid Beladi
KEYWORDS:
Creative Capital, Creative Class, Dynamics, Economic Growth, R&D
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.6,
June
16,
2014
ABSTRACT:
In this note, we analyze a stylized
creative region that is populated by members of the creative class. The
representative individual in this region possesses a constant relative risk
aversion (CRRA) utility function. The existing creative capital is used to
produce a final consumption good and to conduct R&D. We first derive the
equilibrium level of creative capital that is allocated to the R&D sector.
Next, we show how this level is affected by changes in the parameters and in
some of the model constants. Finally, we discuss the policy implications of our
comparative statics results.