What Do We Learn from Schumpeterian Growth Theory?
Philippe Aghion, Ufuk Akcigit, Peter Howitt
P. Aghion, S. N. Durlauf (eds.), Handbook of Economic Growth, Volume 2B, Amsterdam: North Holland,
2014
Abstract
Schumpeterian growth theory has operationalized Schumpeter’s notion of creative destruction by developing models based on this concept. These models shed light on several aspects of the growth process that could not be properly addressed by alternative theories. In this survey, we focus on four important aspects, namely: (i) the role of competition and market structure; (ii) firm dynamics; (iii) the relationship between growth and development with the notion of appropriate growth institutions; and (iv) the emergence and impact of long-term technological waves. In each case, Schumpeterian growth theory delivers predictions that distinguish it from other growth models and which can be tested using micro data.
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Intellectual Property Rights Policy, Competition and Innovation
Daron Acemoglu, Ufuk Akcigit
Journal of the European Economic Association,
No. 1,
2012
Abstract
To what extent and in what form should the intellectual property rights (IPR) of innovators be protected? Should a company with a large technology lead over its rivals receive the same IPR protection as a company with a more limited advantage? In this paper, we develop a dynamic framework for the study of the interactions between IPR and competition, in particular to understand the impact of such policies on future incentives. The economy consists of many industries and firms engaged in cumulative (step-by-step) innovation. IPR policy regulates whether followers in an industry can copy the technology of the leader. We prove the existence of a steady-state equilibrium and characterize some of its properties. We then quantitatively investigate the implications of different types of IPR policy on the equilibrium growth rate and welfare. The most important result from this exercise is that full patent protection is not optimal; instead, optimal policy involves state-dependent IPR protection, providing greater protection to technology leaders that are further ahead than those that are close to their followers. This is because of a trickle-down effect: providing greater protection to firms that are further ahead of their followers than a certain threshold increases the R&D incentives also for all technology leaders that are less advanced than this threshold.
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The Schumpeterian Growth Paradigm
Philippe Aghion, Ufuk Akcigit, Peter Howitt
Annual Review of Economics,
2015
Abstract
In this review, we argue that the Schumpeterian growth paradigm, which models growth as resulting from innovations involving creative destruction, sheds light on several aspects of the growth process that cannot be properly addressed by alternative theories. We focus on three important aspects for which Schumpeterian growth theory delivers predictions that distinguish it from other growth models, namely, (a) the role of competition and market structure, (b) firm dynamics, and (c) the relationship between growth and development.
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Economic Growth: The Past, the Present, and the Future
Ufuk Akcigit
Journal of Political Economy,
No. 6,
2017
Abstract
“Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? If so, what, exactly? If not, what is it about the ‘nature of India’ that makes it so? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else. (Lucas 1988, 5)”
These words by the Nobel laureate Chicago economist Robert Lucas Jr. summarize why so many great scholars found it hard to “think about anything else” and spent their careers trying to understand the process of economic growth. Economies are complex systems resulting from the actions of many actors. This complexity makes it challenging, but also infinitely interesting, to understand the determinants of economic growth. What are the roles of human capital, fertility, ideas, basic science, and public policy for growth? These are just some of the important questions that were posed by many highly influential studies featured in the issues of the Journal of Political Economy over the years. Indeed, this journal has been the platform to diffuse many of the brilliant ideas and start important debates in the field of economic growth. In this short paper, my goal is to revisit some of those seminal papers, briefly describe some of the more recent contributions, and end with some thoughts about the future direction of the field. The reader should note in advance that the list of work covered here is by no means exhaustive and mostly targets work that has been featured in issues of the JPE.
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Immigration and the Rise of American Ingenuity
Ufuk Akcigit, John Grigsby, Tom Nicholas
American Economic Review,
No. 5,
2017
Abstract
We build on the analysis in Akcigit, Grigsby, and Nicholas (2017) by using US patent and census data to examine the relationship between immigration and innovation. We construct a measure of foreign born expertise and show that technology areas where immigrant inventors were prevalent between 1880 and 1940 experienced more patenting and citations between 1940 and 2000. The contribution of immigrant inventors to US innovation was substantial. We also show that immigrant inventors were more productive than native born inventors; however, they received significantly lower levels of labor income. The immigrant inventor wage-gap cannot be explained by differentials in productivity.
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Structural Reforms in Banking: The Role of Trading
Jan Pieter Krahnen, Felix Noth, Ulrich Schüwer
Journal of Financial Regulation,
No. 1,
2017
Abstract
In the wake of the recent financial crisis, significant regulatory actions have been taken aimed at limiting risks emanating from banks’ trading activities. The goal of this article is to look at the alternative reforms in the US, the UK and the EU, specifically with respect to the role of proprietary trading. Our conclusions can be summarized as follows: First, the focus on a prohibition of proprietary trading, as reflected in the Volcker Rule in the US and in the current proposal of the European Commission (Barnier proposal), is inadequate. It does not necessarily reduce risk-taking and it is likely to crowd out desired trading activities, thereby possibly affecting financial stability negatively. Second, trading separation into legally distinct or ring-fenced entities within the existing banking organizations, as suggested under the Vickers proposal for the UK and the Liikanen proposal for the EU, is a more effective solution. Separation limits cross-subsidies between banking and proprietary trading and diminishes contagion risk, while still allowing for synergies and risk management across banking, non-proprietary trading, and proprietary trading.
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How Do Banks React to Catastrophic Events? Evidence from Hurricane Katrina
Claudia Lambert, Felix Noth, Ulrich Schüwer
Review of Finance,
No. 1,
2019
Abstract
This paper explores how banks react to an exogenous shock caused by Hurricane Katrina in 2005, and how the structure of the banking system affects economic development following the shock. Independent banks based in the disaster areas increase their risk-based capital ratios after the hurricane, while those that are part of a bank holding company on average do not. The effect on independent banks mainly comes from the subgroup of highly capitalized banks. These independent and highly capitalized banks increase their holdings in government securities and reduce their total loan exposures to non-financial firms, while also increasing new lending to these firms. With regard to local economic development, affected counties with a relatively large share of independent banks and relatively high average bank capital ratios show higher economic growth than other affected counties following the catastrophic event.
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Imputation Rules for the Implementation of the Pre-unification Education Variable in the BASiD Data Set
André Diegmann
Journal for Labour Market Research,
2017
Abstract
Using combined data from the German Pension Insurance and the Federal Employment Agency (BASiD), this study proposes different procedures for imputing the pre-unification education variable in the BASiD data. To do so, we exploit information on education-related periods that are creditable for the Pension Insurance. Combining these periods with information on the educational system in the former GDR, we propose three different imputation procedures, which we validate using external GDR census data for selected age groups. A common result from all procedures is that they tend to underpredict (overpredict) the share of high-skilled (low-skilled) for the oldest age groups. Comparing our imputed education variable with information on educational attainment from the Integrated Employment Biographies (IEB) reveals that the best match is obtained for the vocational training degree. Although regressions show that misclassification with respect to IEB information is clearly related to observables, we do not find any systematic pattern across skill groups.
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Nowcasting East German GDP Growth: a MIDAS Approach
João Carlos Claudio, Katja Heinisch, Oliver Holtemöller
Abstract
Economic forecasts are an important element of rational economic policy both on the federal and on the local or regional level. Solid budgetary plans for government expenditures and revenues rely on efficient macroeconomic projections. However, official data on quarterly regional GDP in Germany are not available, and hence, regional GDP forecasts do not play an important role in public budget planning. We provide a new quarterly time series for East German GDP and develop a forecasting approach for East German GDP that takes data availability in real time and regional economic indicators into account. Overall, we find that mixed-data sampling model forecasts for East German GDP in combination with model averaging outperform regional forecast models that only rely on aggregate national information.
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Measuring Indirect Effects of Unfair Employer Behavior on Worker Productivity – A Field Experiment
Matthias Heinz, Sabrina Jeworrek, Vanessa Mertins, Heiner Schumacher, Matthias Sutter
Abstract
We present a field experiment in which we set up a call-center to study how the productivity of workers is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift. Compared to two different control treatments, we find that, in the layoff treatment, the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers’ competence, but rather related to the workers’ perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR managers. We also show that the effect of unfair behavior on the productivity of unaffected workers is close to the upper bound of the direct effects of wage cuts on the productivity of affected workers. This suggests that the price of an employer’s unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.
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