Innovation and Economic Volatility: Facts and Theory Open Access

Min, Yanbing (2016)

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The pioneer work, Comin and Mulani (2007, JME), contributes the diverging trends between microeconomic and macroeconomic level volatility to the arrival of general purpose technology found by the market leaders. This paper documents that the patent count as a measure of innovation can significantly account for the increase in firm volatility and the decline in aggregate level volatility, replacing the effect of general purpose technology in the recent literature. Here, I document the data collection, construction and regression results. Also, a benchmark general equilibrium model is proposed using industry equilibrium as in Melitz (2003).

Table of Contents

Contents 1

Introduction 1

2 Data 3

2.1 Data Sources 3

2.2 Data Construction 4

2.3 Summary Statistics 6

3 Empirical Findings 6

4 Regressions 10

5 General Equilibrium Model 11

5.1 Setup 11

5.2 Equilibrium 15

5.3 Analysis 15

6 Conclusions 18

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