Heterogeneity, competition, and macroeconomic dynamics

Francesca Chiaromonte, Giovanni Dosi

Research output: Contribution to journalArticle

53 Scopus citations

Abstract

The paper presents an evolutionary model in which certain regularities in macroeconomic dynamics, such as in income and labour productivity growth, are the outcome of far-from-equilibrium interactions among heterogeneous, boundedly rational, agents. Relatively ordered patterns of change emerge as a collective self-organizing property of the system, while individual agents are always undergoing processes of mistake-ridden innovation, imitation, and market selection. Technological dynamics is endogenous and the rate of innovation is primarily constrained by the abilities of agents to exploit notional innovative opportunities; these are generally well in excess of what agents are able to master. Innovations influence aggregate dynamics via (i) time-consuming diffusion among producers and users, and (ii) associated demand impulses. Microheterogeneity has a paramount importance for the aggregate behaviour of the system.

Original languageEnglish (US)
Pages (from-to)39-63
Number of pages25
JournalStructural Change and Economic Dynamics
Volume4
Issue number1
DOIs
StatePublished - Jun 1993

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All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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