Demand-Pull, Technology-Push, and the Sectoral Direction of Innovation

Diego Comin, Danial Lashkari and Martí Mestieri

No 1287, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a multi-sectoral endogenous growth model in which the direction of innovation across sectors is endogenous. Thus, our model provides a theoretical framework to think about the classical demand-pull versus technology-push drivers of innovation in a general equilibrium framework. A robust prediction that emerges from our analysis is that innovation growth should be higher in more income-elastic sectors. We test this prediction using the universe of U.S. patents for the period 1976-2007. We find empirical support for this prediction. Preliminary analysis of firm R&D expenditures from the U.S. census also confirm this prediction.

Date: 2016
New Economics Papers: this item is included in nep-dge, nep-ent, nep-gro, nep-ino, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1287

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