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.
References
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[2]
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