Abstract
This paper presents a Dynamic Stochastic General Equilibrium (DSGE) model that endogenizes technological growth, providing a comprehensive framework for analyzing medium- to long-term economic fluctuations. Unlike traditional DSGE models, which primarily focus on short-term business cycles and treat technological progress as an exogenous factor, this model explicitly in-corporates R&D investment, human capital accumulation, demographic changes, and labor force participation dynamics to examine their interplay with technological development. The findings reveal that different types of productivity shocks lead to distinct economic outcomes. While im-provements in existing technology initially stimulate short-term growth, they divert resources away from innovation, ultimately slowing long-term economic growth. In contrast, enhanced R&D efficiency may temporarily dampen production but fosters sustained technological progress over time. Additionally, declining birth rates and an aging population reduce the productivity of inno-vation, negatively affecting per capita GDP growth. To counteract these adverse effects, proactive policies that support education, workforce development, and human capital investment are essential for sustaining long-term economic vitality.
