Wednesday, November 03, 2004

Ideas and growth

I have to agree with Don Bodreaux of CafeHayek. This guy Bryan Caplan is great (though, I'm sure I am not with his ideological stand). The idea of ideas for growth is surely not new. But the way Caplan models it is a hats-off (get the complete papers from his website). Quoted: "Good ideas cause good policies. Good policies cause good growth. Good growth causes good ideas." But, as he warns, the process can go the opposite way. That is what he calls "idea trap". Now, be prepared (and this is what might have made me reconsider my admiration; had I found a flaw in his model). How to get out of the trap? You need ... luck! Who else models luck, anyway?

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