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Patent-Based News Shocks

Danilo Cascaldi-Garcia and Marija Vukotic ()

The Review of Economics and Statistics, 2022, vol. 104, issue 1, 51-66

Abstract: What do patents tell us about the economic effects of future technological improvements? We identify aggregate and industry-level patent-based news shocks by exploiting changes in stock market valuations of firms that obtain patent grants. Our shocks resemble diffusion news: they do not affect total factor productivity in the short run but induce a strong permanent effect after five years. We find that patent-based news shocks produce positive co-movement between consumption, output, investment, and hours. They also generate positive responses in inflation and in the federal funds rate, consistent with standard New Keynesian models.

Date: 2022
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https://doi.org/10.1162/rest_a_00943
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Related works:
Working Paper: Patent-Based News Shocks (2020) Downloads
Working Paper: Patent-Based News Shocks (2019) Downloads
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The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

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