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Implications of the Recent Financial Crisis for Innovation

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Abstract

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 Tobin's (and Minsky's) “q†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.

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  • William Milberg & Nina Shapiro, 2013. "Implications of the Recent Financial Crisis for Innovation," SCEPA working paper series. 2013-2, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2013-2
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    Cited by:

    1. Radhika Balakrishnan & William Milberg, 2019. "Firm innovation and capitalist dialectics: The economics of Nina Shapiro," The Economic and Labour Relations Review, , vol. 30(4), pages 467-477, December.
    2. Alberto Botta, 2017. "The Complex Inequality–Innovation–Public Investment Nexus: What We (Don’t) Know, What We Should Know and What We Have to Do," Forum for Social Economics, Taylor & Francis Journals, vol. 46(3), pages 275-298, July.
    3. Shan Xu & Lili Guo, 2023. "Financialization and Corporate Performance in China: Promotion or Inhibition?," Abacus, Accounting Foundation, University of Sydney, vol. 59(3), pages 776-817, September.
    4. Xiaoye Liu & Kedong Yin & Yun Cao, 2021. "Contribution of the Optimization of Financial Structure to the Real Economy: Evidence from China’s Financial System Using TVP-VAR Model," Mathematics, MDPI, vol. 9(18), pages 1-21, September.
    5. Yingying Zhou & Yuehan Du & Fengyi Lei & Ziru Su & Yifei Feng & Jie Li, 2021. "Influence of Financialization of Heavily Polluting Enterprises on Technological Innovation under the Background of Environmental Pollution Control," IJERPH, MDPI, vol. 18(24), pages 1-21, December.
    6. Robert H. Wade, 2014. "‘Market versus State’ or ‘Market with State’: How to Impart Directional Thrust," Development and Change, International Institute of Social Studies, vol. 45(4), pages 777-798, July.

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    stock market; innovation;

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