Structural change and financing constraints

Anna Ilyina and Roberto Samaniego ()

Journal of Monetary Economics, 2012, vol. 59, issue 2, 166-179

Abstract: In a multi-industry growth model, firms need external funds for productivity-enhancing R&D, and face financing constraints. The cost of research differs across industries, so financing constraints hinder industry productivity growth unevenly. Equilibrium industry dynamics map into a differences-in-differences regression specification where industry growth depends on the interaction between country financial development and industry R&D intensity. The paper provides a framework for interpreting several empirical results that rely on industry growth data in terms of R&D-induced technology transfer, and identifies a new channel for finance to encourage aggregate growth: the reallocation of resources towards sectors with rapidly expanding technological frontiers.

Date: 2012
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:59:y:2012:i:2:p:166-179

DOI: 10.1016/j.jmoneco.2011.12.002

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