Innovating firms and aggregate innovation

Tor Klette and Samuel Kortum

No 300, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We develop a parsimonious model of innovating firms rich enough to confront firm-level evidence. It captures the dynamic behavior of individual heterogeneous firms, describes the evolution of an industry with simultaneous entry and exit, and delivers a general equilibrium model of technological change. While unifying the theoretical analysis of firms, industries, and the aggregate economy, the model yields insights into empirical work on innovating firms. It accounts for the persistence over time of firms? R&D investment, the concentration of R&D among incumbent firms, and the link between R&D and patenting. Furthermore, it explains why R&D as a fraction of revenues is strongly related to firm productivity yet largely unrelated to firm size or growth.

Keywords: Productivity; Research and development (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-ent and nep-ino
References: View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: Innovating Firms and Aggregate Innovation (2004)
Working Paper: Innovating Firms and Aggregate Innovation (2002)
Working Paper: Innovating Firms and Aggregate Innovation (2002)
Working Paper: Innovating Firms and Aggregate Innovation (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmsr:300

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