I use U.S. manufacturing industry data to estimate a system of three equations implied by a model of R&D-induced growth in steady state. These three equations relate R&D intensity to patenting, patenting to technological progress, and technological progress to economic growth. In each case, I find evidence of positive impact. Thus, I reject the null hypothesis that growth is not induced by R&D ...

I construct an endogenous growth model where R&D is carried out at the industry level in a game of innovation between leaders and followers. Innovation costs for followers are assumed to increase with the technological lag from leaders. I obtain three results that contrast with standard Schumpeterian models, such as Aghion and Howitt (1992). First, leaders may innovate in equilibrium, in an att...

This paper extends the standard quality ladder model of innovation and quality growth by allowing for heterogeneous industries. This enables us not only to deal with the Schumpeterian hypothesis about market power and innovation, but also to analyze industry specific demand pull and technology push effects. In accordance with the empirical evidence, we show that perspective of large market powe...

In this paper, we extend the model of firm dynamics of Garcia-Macia, Klenow, and Hsieh (2016) (GHK) to include a description of the costs of innovative investments as in the models of Klette and Kortum (2004), Luttmer (2007, 2011), and Atkeson and Burstein (2010). In this model, aggregate productivity (TFP) grows as a result of innovative investment by incumbent and entering firms in improving ...

As they account for the largest share of employment and value added, services do not (or cannot) lie outside a Schumpeterian view of innovation phenomena. Of the various attempts at shedding more light on the mechanisms of innovation in service industries and firms, we consider the “reverse product cycle” to warrant special attention because of its highly thought-provoking nature and its theore...

Modellers have had to wrestle with an unavoidable trade-off between the demand of a general theoretical approach and the descriptive accuracy required to model a particular phenomenon. A new class of simulation models has shown to be well adapted to this challenge, basically by shifting outwards this trade-off: So-called agent-based models (ABMs henceforth) are increasingly used for the modelli...

Though the process of knowledge spillovers was a prominent topic in the early endogenous growth models of Romer (1986) and Lucas (1988), more recent modeling has eschewed explicit knowledge spillover mechanisms in favor of a greater emphasis on innovation and research and development (R&D) expenditure. The Schumpeterian models of Aghion and Howitt (1992), among others, have identified innovativ...

How does firm heterogeneity affect the long-run consequences of financial crises? To answer this question, I introduce aggregate shocks and differences in innovative potential firms into a Schumpeterian endogenous growth model. Firm amplifies effects crisis on innovation, because small are both relatively more than large hit harder by crisis. A calibration using manufacturing data from Spain sh...