Aggregate Implications of Innovation Policy

Andrew Atkeson and Ariel T. Burstein

No 17493, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the quantitative impact of policy-induced changes in innovative investment by firms on growth in aggregate productivity and output in a model that nests several of the canonical models in the literature. We isolate two statistics, the impact elasticity of aggregate productivity growth with respect to an increase in aggregate innovative investment and the degree of intertemporal knowledge spillovers in research, that play a key role in shaping the model’s predicted dynamic response of aggregate productivity, output, and welfare to a policy-induced change in the innovation intensity of the economy. Given estimates of these statistics, we find that there is only modest scope for increasing aggregate productivity and output over a 20-year horizon with uniform subsidies to firms’ investments in innovation of a reasonable magnitude, but the welfare gains from such a subsidy may be substantial.

JEL-codes: E6 O11 O3 (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-cba, nep-ino and nep-mac
Note: EFG
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Citations: View citations in EconPapers (16)

Published as Andrew Atkeson & Ariel Burstein, 2019. "Aggregate Implications of Innovation Policy," Journal of Political Economy, vol 127(6), pages 2625-2683.

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Related works:
Working Paper: Aggregate implications of innovation policy (2015)
Working Paper: Aggregate implications of innovation policy (2011)
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