Idea Rents and Firm Growth

Timo Boppart, Peter J. Klenow, Reiko Laski and Huiyu Li

No 35594, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Which firms drive aggregate productivity growth? We document that firms with high price-earnings ratios tend to see increases in their subsequent earnings relative to sales, which we interpret as rents from ideas (innovation). We construct an endogenous growth model with shocks to firm innovation step-sizes and R&D efficiency and calibrate it to match patterns in the data. The model implies that growth would be much lower, even with the same innovative effort, if firms had the same step sizes. The model can be used to infer expected growth contributions of individual firms (such as members of the Magnificent Seven). We find that the share of growth coming from smaller listed firms substantially exceeds their sales share, whereas the largest listed firms account for less than their sales share.

JEL-codes: L11 O31 O41 (search for similar items in EconPapers)
Date: 2026-08
Note: EFG PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w35594.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:35594

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w35594
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().