Implications of the Recent Financial Crisis for Innovation
William Milberg and
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Nina Shapiro: Schwartz Center for Economic Policy Analysis (SCEPA), http://www.economicpolicyresearch.org
No 2013-2, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School
We discuss the effects of the stock market in the second part of the paper, which centers on the relation between stock prices and R&D investment. We examine Tobinâ€™s (and Minskyâ€™s) â€œqâ€ theory and the implications it has for this investment, along with the relationship between innovation and stock prices in the 1920s and 1990s. We compare the links between them in these periods with those of the 2000s, arguing that what distinguishes the recent run up in asset prices from the bubbles of those other eras is that this bubble was not accompanied by an investment boom, in either fixed capital or R&D. Finance financed finance, increasing its availability instead of productive capabilities, with the innovations of the period mainly financial, and the legacy not new production facilities and knowledge that could be utilized under more propitious conditions, but unfinished housing developments and abandoned houses.
Keywords: stock market; innovation (search for similar items in EconPapers)
Pages: 37 pages
New Economics Papers: this item is included in nep-ino and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:epa:cepawp:2013-2
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