Technological Rivalry and Optimal Dynamic Policy in an Open Economy

Speaker：Lyu Dan（Assistant Professor, The Chinese University of Hong Kong）

Host：ZHAN Chaoqun, Assistant Professor, Lingnan College

Time and Date：14:30, Apr.14, 2023

Venue: Wang Daohan Conference Room(101), Lingnan Hall

Language: English + Chinese

Abstract:

We study optimal policies in a multi-country, multi-sector model with endogenous technology accumulation through R&D innovation. There exist time-consistent optimal policies, which consist of innovation and trade policies, even when private innovation allocations are efficient. We derive explicit expressions for optimal policies and present general results for various specifications. The underlying mechanism is that a country has an incentive to use innovation policy and tariffs to affect foreign innovation efforts and technology, for both static and dynamic terms of trade consideration. By contrast, optimal policies under exogenous technology call for uniform tariffs across countries and sectors. Our quantitative analysis computes the optimal policies for China on the two-digit manufacturing sectors for a world with China, the U.S., Germany, Japan, and the rest of the world.

Profile of the speaker:

https://www.econ.cuhk.edu.hk/econ/en-gb/people/faculty?view=faculty&id=danlu