We develop a multi-sector general equilibrium model in which productivity growth is driven by the production of sector-specific knowledge. In the model, we find that long run differences in total factor productivity growth across sectors are independent of the parameters of the knowledge...

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between value added productivity and gross output productivity. We demonstrate their quantitative significance for the case of...

What factors underlie industry differences in research intensity and productivity growth? We develop a multi-sector endogenous growth model allowing for industry specific parameters in the production functions for output and knowledge, and in consumer preferences. We find that industry...

In a general equilibrium product-cycle model, lower trade barriers in-crease Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation,...

When will reducing trade barriers against a low wage country cause innovation to increase in high wage regions like the US or EU? We develop a model where factors of production have costs of adjustment and so are partially "trapped" in producing old goods. Trade liberalization with a low wage...