Local Booms and Innovation

Federica Coelli and Paul Pelzl

No 20317, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Using oil and gas shocks as an exogenous source of business cycles at the U.S. commuting zone level, we provide novel evidence that local booms increase local patenting, especially in non-metropolitan areas. This reflects agglomeration economies that make incumbent inventors more productive. In contrast to total patenting, innovation in oil and gas — the sector closest to the boom — is countercyclical, consistent with higher opportunity costs of innovation in a booming industry. Our findings shed new light on the spatial dimension of innovation, inform recent debates on place-based industrial policy, and help to reconcile mixed evidence on the cyclicality of innovation.

Keywords: Innovation (search for similar items in EconPapers)
JEL-codes: L71 O12 O31 (search for similar items in EconPapers)
Date: 2025-05
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