Title of article
A theoryofgrowthandvolatilityattheaggregateandfirmlevel
Author/Authors
Diego Comin، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2008
Pages
20
From page
1023
To page
1042
Abstract
We presentanendogenousgrowthmodelthat explainstheevolutionofthefirstand
secondmomentsofproductivitygrowthattheaggregateandfirmlevelduringthepost-
war period.Growthisdrivenbythedevelopment ofboth(i)idiosyncraticR&Dinnovations
and (ii)generalinnovationsthatcanbefreelyadoptedbymanyfirms.Firm-levelvolatility
is affectedprimarilybytheSchumpeteriandynamicsassociatedwiththedevelopmentof
R&Dinnovations.Thevarianceofaggregateproductivitygrowthisdrivenbythearrival
rate ofgeneralinnovations.Ceterisparibus,theshareofresourcesspentondevelopmentof
general innovationsincreaseswiththestabilityofthemarketshareoftheindustryleader.
As marketsharesbecomelesspersistent,themodelpredictsanendogenousshiftinthe
allocationofresourcesfromthedevelopmentofgeneralinnovationstothedevelopmentof
R&Dinnovations.ThisresultsinanincreaseinR&D,anincreaseinfirm-levelvolatility,and
a declineinaggregatevolatility.Theeffectonproductivitygrowthisambiguous.
On theempiricalside,thispaperpresentsnewcross-countryevidencethatR&D
subsidiesarenotsignificantlyassociatedwithhighergrowthbutareassociatedwithlower
aggregate volatility.Italsodocumentsanupwardtrendintheinstabilityofmarketshares,a
positiveassociationbetweenfirmvolatilityandR&Dspending,andanegativeassociation
acrosssectorsbetweenR&Dandhowcorrelatedthesectoriswiththerestoftheeconomy
Keywords
Endogenous growthAggregate volatilityFirm-level volatilityInnovation
Journal title
Journal of Monetary Economics
Serial Year
2008
Journal title
Journal of Monetary Economics
Record number
846350
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