Endogenizing technical change: Uncertainty, profits, entrepreneurship. A long-term view of sectoral dynamics

Taking as reference the long-wave theory, in this paper we try to give a fully endogenous explanation of the factors triggering the technological revolutions – one of the main causes of a new long upswing. We extend the traditional macro and meso economic analysis by presenting a behavioural model in which innovation, entrepreneurship and radical uncertainty play a crucial role in determining the dynamics of the system. Our theoretical analysis is enriched and formalized in a multi-sectoral model, whose consistency is verified through numerical simulations.

► An endogenous explanation of radical technical change in a long-waves context. ► Role of radical uncertainty and its quantification. ► Role of entrepreneurship in explaining radical technical change. ► Numerical simulation of the model, to check for its consistency.