Technological Innovation, Resource Allocation, and Growth

Leonid Kogan, Dimitris Papanikolaou, Amit Seru and Noah Stoffman

No 17769, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent- level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations that the patent receives in the future. Our new measure is associated with substantial growth, reallocation and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.

JEL-codes: E32 G14 O3 O4 (search for similar items in EconPapers)
Date: 2012-01
New Economics Papers: this item is included in nep-cse, nep-ino, nep-ipr, nep-pr~, nep-mac and nep-sbm
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Published as Leonid Kogan & Dimitris Papanikolaou & Amit Seru & Noah Stoffman, 2017. "Technological Innovation, Resource Allocation, and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 665-712.

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