Patent-Based News Shocks
Danilo Cascaldi-Garcia () and
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Marija Vukotic: University of Warwick
The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
In this paper we exploit ﬁrm-level data on patent grants and subsequent reactions of their stocks to identify technological news shocks. Changes in stock market valuations due to announcements of individual patent grants represent expected future increases in the technology level, which we refer to as patent-based news shocks. Our patent-based news shocks resemble diﬀusion news in that they do not aﬀect total factor productivity in the short-run but account for about 20 percent of its variations after ﬁve years. These shocks induce positive comovement between consumption, output, investment and hours. Unlike the existing empirical evidence, patent-based news shocks generate a positive response in inﬂation and the federal funds rate, in line with a standard New Keynesian model. Patenting activity in electronic and electrical equipment industries within the manufacturing sector and computer programming and data processing services within the services sector play a crucial role in driving our results.
Keywords: News Shocks; Patents; Patent-based news shocks (search for similar items in EconPapers)
JEL-codes: E3 E32 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind, nep-ino, nep-ipr, nep-mac and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1225
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