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Products, patents and productivity persistence: A DSGE model of endogenous growth

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  • Tom Holden

Abstract

This paper builds a dynamic stochastic general equilibrium (DSGE) model of endogenous growth that is capable of generating substantial degrees of endogenous persistence in productivity.� When products go out of patent protection, the rush of entry into their production destroys incentives for process improvements.� Consequently, old production processes are enshrined in industries producing non-protected products, resulting in aggregate productivity persistence.� Our model also generates sizeable delayed movements in productivity in response to preference shocks, providing a form of endogenous news shock.� Finally, if we calibrate our model to match a high aggregate mark-up then we can replicate the negative response of hours to a positive technology shock, even without the inclusion of any frictions.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 512.

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Date of creation: 01 Nov 2010
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Handle: RePEc:oxf:wpaper:512

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Keywords: Productivity persistence; patent protection; oligopoly; research and development;

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  1. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2007. "Monetary Policy and Business Cycles with Endogenous Entry and Product Variety," NBER Working Papers 13199, National Bureau of Economic Research, Inc.
  2. Paul Beaudry & Bernd Lucke, 2009. "Letting Different Views about Business Cycles Compete," NBER Working Papers 14950, National Bureau of Economic Research, Inc.
  3. Christian Groth & Karl-Josef Koch & Thomas M. Steger, 2009. "When economic growth is less than exponential," Volkswirtschaftliche Diskussionsbeiträge 129-09, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
  4. Diego Comin & Mark Gertler & Ana Maria Santacreu, 2009. "Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations," Harvard Business School Working Papers 09-134, Harvard Business School.
  5. Diego Comin, 2009. "On the integration of growth and business cycles," Empirica, Springer, Springer, vol. 36(2), pages 165-176, May.
  6. Gospodinov, Nikolay, 2010. "Inference in Nearly Nonstationary SVAR Models With Long-Run Identifying Restrictions," Journal of Business & Economic Statistics, American Statistical Association, American Statistical Association, vol. 28(1), pages 1-12.
  7. Comin, D. & Gertler, M., 2003. "Medium Term Business Cycles," Working Papers, C.V. Starr Center for Applied Economics, New York University 03-05, C.V. Starr Center for Applied Economics, New York University.
  8. Jeff Wrase & Kerk Phillips, 2004. "Is Schumpeterian Creative Destruction a Plausible Source of Endogenous Real Business Cycle Shocks," Econometric Society 2004 Far Eastern Meetings, Econometric Society 428, Econometric Society.
  9. Christian Broda & David E. Weinstein, 2007. "Product Creation and Destruction: Evidence and Price Implications," NBER Working Papers 13041, National Bureau of Economic Research, Inc.
  10. Del Negro, Marco & Schorfheide, Frank & Smets, Frank & Wouters, Rafael, 2005. "On the Fit and Forecasting Performance of New Keynesian Models," CEPR Discussion Papers 4848, C.E.P.R. Discussion Papers.
  11. Adjemian, Stéphane & Bastani, Houtan & Karamé, Fréderic & Juillard, Michel & Maih, Junior & Mihoubi, Ferhat & Perendia, George & Pfeifer, Johannes & Ratto, Marco & Villemot, Sébastien, 2011. "Dynare: Reference Manual Version 4," Dynare Working Papers 1, CEPREMAP, revised Jul 2014.
  12. Peretto, Pietro F., 1999. "Cost reduction, entry, and the interdependence of market structure and economic growth," Journal of Monetary Economics, Elsevier, Elsevier, vol. 43(1), pages 173-195, February.
  13. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers tecipa-300, University of Toronto, Department of Economics.
  14. Christopher J. Nekarda & Valerie A. Ramey, 2013. "The Cyclical Behavior of the Price-Cost Markup," NBER Working Papers 19099, National Bureau of Economic Research, Inc.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Products, patents and productivity persistence: A DSGE model of endogenous growth
    by Christian Zimmermann in NEP-DGE blog on 2010-12-25 15:52:42
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Cited by:
  1. Charpe, Matthieu & Kühn, Stefan, 2012. "Bargaining, Aggregate Demand and Employment," Dynare Working Papers 13, CEPREMAP.
  2. Robert M´barek & Ivelin Iliev Rizov, 2013. "European Coexistence Bureau. Best Practice Documents for coexistence of genetically modified crops with conventional and organic farming. 3. Coexistence of genetically modified maize and honey product," JRC-IPTS Working Papers JRC84850, Institute for Prospective and Technological Studies, Joint Research Centre.
  3. Bernardo Maggi & Daniel Muro, 2014. "A dynamical countries-interaction model based on technology for the study of European growth and stability," DSS Empirical Economics and Econometrics Working Papers Series, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome 2014/1, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome.
  4. Tom Holden, 2012. "Medium-frequency cycles and the remarkable near trend-stationarity of output," School of Economics Discussion Papers, School of Economics, University of Surrey 1412, School of Economics, University of Surrey.
  5. Michael Funke & Michael Paetz, 2012. "A DSGE-based assessment of nonlinear loan-to-Value policies: Evidence from Hong Kong," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21204, Hamburg University, Department of Economics.
  6. Michael Funke & Michael Paetz & Qianying Chen,, 2012. "Market and Non-Market Monetary Policy Tools in a Calibrated DSGE Model for Mainland China," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21207, Hamburg University, Department of Economics.
  7. Funke , Michael & Paetz , Michael, 2012. "Financial system reforms and China’s monetary policy framework: A DSGE-based assessment of initiatives and proposals," BOFIT Discussion Papers 30/2012, Bank of Finland, Institute for Economies in Transition.
  8. Tom Holden & Michael Paetz, 2012. "Efficient Simulation of DSGE Models with Inequality Constraints," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 21207b, Hamburg University, Department of Economics.
  9. Kaufmann, Daniel & Bäurle, Gregor, 2013. "Exchange Rate and Price Dynamics at the Zero Lower Bound," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79872, Verein für Socialpolitik / German Economic Association.
  10. Axel Tonini & Jerzy Michalek & Thomas Fellmann & Robert M'baretk & Jacques Delincé & George Philippidis & Maciej Bukowski & Piero Conforti & Alexandre Gohin & Andrey Krasovskii & Hans Van Meijl & Dom, 2013. "Simulating long term effects of policies in the agrifood sector: requirements, challenges and recommendations," Working Papers 222739, Institut National de la Recherche Agronomique, France.
  11. J. Stephen Ferris, 2012. "The Relationship Between Government Size and Economic Performance with Particular Application to New Zealand," Carleton Economic Papers 12-06, Carleton University, Department of Economics, revised 25 Apr 2013.

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