This paper analyzes the macroeconomic effects of the introduction of a new and superior technique. We argue that technical progress represents a qualitative change, and as such calls for a restructuring of productive capacity that is necessary in order to reap the potential benefits of this change. This restructuring takes place in time, is charaterized by irreversibilities that pose a problem of intertemporal coordination, and thus can not be treated as an equilibrium phenomenon. This is why we propose a sequential model (derived by Hicks, 1973) whose distinguishing features is the explicit consideration of the time structure of production. This model is in our opinion well suited to highlight the dynamics of technical change, and the crucial factors behind it (accumulation, monetary policy, learning).

The standard representation of technology a production function is appropriate in equilibrium, when the synchronization of economic activity makes the temporal articulation of production irrelevant. Inputs map directly into output, and there is no possible discrepancy between potential and actual productivity.