An Elementary Model of VC Financing and Growth

Jeremy Greenwood, Pengfei Han, Hiroshi Inokuma () and Juan M. Sanchez

No 2022-031, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This article uses an endogenous growth model to study how the improvements in financing for innovative start-ups brought by venture capital (VC) affect firm innovation and growth. Partial equilibrium results show how lending contracts change as financing efficiency improves, while general equilibrium results demonstrate that better screening and development of projects by VC investors leads to higher aggregate productivity growth.

Keywords: endogenous growth; financial development; innovation; IPO; screening; research and development; startups; venture capital (search for similar items in EconPapers)
JEL-codes: E13 E22 G24 L26 O16 O31 O40 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2022-08-03
New Economics Papers: this item is included in nep-cfn, nep-dge, nep-ent, nep-fdg, nep-gro, nep-ino, nep-ppm and nep-sbm
Note: Publisher DOI: https://doi.org/10.20955/r.105.66-73
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Published in Federal Reserve Bank of St. Louis Review

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Journal Article: An Elementary Model of VC Financing and Growth (2023)
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DOI: 10.20955/wp.2022.031

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