This paper analyzes optimal and non-optimal regulation of environmental externalities with investment in technology and uncertainty about the severity of environmental damages. Investment creates the potential for technology spillovers so that optimal regulation must address externalities from both emissions and investment. Despite these multiple externalities and uncertainty, we show that an o...

Using data from 11 manufacturing industries in 17 OECD countries, this paper empirically investigates the determinants of cross-country differences in the persistence of productivity differentials. Specifically, the paper focuses on the effects of product market structure and technology diffusion. It is found that the manufacturing industries display a wide range of convergence rates. Consisten...

We show that regional differences in returns to information technology (IT) investments by US firms are attributable in part to IT spillovers generated by the flow of IT workers among firms. We use a newly developed source of employee micro-data with employer identifiers and location information to model IT workers’ mobility patterns. Access to an external IT pool that is one standard deviation...

We examine the “home bias” of knowledge spillovers (the idea that knowledge spreads more slowly over international boundaries than within them) as measured by the speed of patent citations. We present econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed esti...

We document that at business cycle frequency, nominal variables, such as aggregate price levels and nominal interest rates, are more correlated across countries than real output. Since national central banks control the domestic money supply and their objective has been to keep the nominal environment stable this might seem puzzling. We ask whether a simple, transparent standard international b...

This paper develops a non-Schumpeterian endogenous growth model of R&D in which the firm’s free-riding behavior, reinforced by a lack of appropriability in its industry, constitutes a major source of growth in the economy. While models analyzing the interaction between either imitation and innovation or spillovers and innovation have already appeared in the literature, we show how imitation via...

In this paper we investigate the innovativeness of a network of firms, each of which can experience innovation spillovers (i.e. technological externalities) from its neighbours. A cellular automata framework is used to provide a new theoretical method for analysing such networks. Considering network spillovers produces a nonlinear relationship between the strength of spillovers and overall inno...

This paper examines the issue of volatility spillovers across the three largest European stock markets, namely London, Frankfurt and Paris. The Exponential Generalized Autoregressive Conditional Heteroscedasticity model is used to capture potential asymmetric effects of innovations on volatility. During the period from 01/01/84 to 07/12/93, reciprocal spillovers are found to exist between Londo...

Using data from 11 manufacturing industries in 17 OECD countries, this paper empirically investigates the determinants of cross-country differences in the persistence of productivity differentials. Specifically, the paper focuses on the effects of product market structure and technology diffusion. It is found that the manufacturing industries display a wide range of convergence rates. Consisten...

GIVEN THE LARGE NUMBER OF APPENDICES, there is an unusually heavy demand on mathematical notation in this paper. As a guide for the reader, we follow three rules. First, within the body of the text, we use a consistent set of symbols. Second, when the text draws from an appendix, we ensure that the notation is the same in that appendix and the text. Third, within each appendix, we use a consist...