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Innovation and Stock Prices: a Review of some Recent Work

  • Mariana Mazzucato

The paper reviews work which draws a link between the dynamics of innovation and the dynamics of stock prices. One of the key findings is the relationship between innovation intensity (e.g. radical innovation) and the volatility of firm level stock returns. By connecting the analysis of risk and uncertainty? often related in the finance literature to ?animal spirits? and other stochastic factors? to changes in real production conditions at the firm and industry level, the paper provides the foundation for a Schumpeterian analysis of time varying risk. JEL Classification: G12, 030.

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Article provided by Presses de Sciences-Po in its journal Revue de l'OFCE.

Volume (Year): 97 bis (2006)
Issue (Month): 5 ()
Pages: 159-179

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Handle: RePEc:cai:reofsp:reof_073_0159
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  1. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 2010. "A theory of Fads, Fashion, Custom and cultural change as informational Cascades," Levine's Working Paper Archive 1193, David K. Levine.
  2. Pástor, Luboš & Veronesi, Pietro, 2004. "Was There A Nasdaq Bubble in the Late 1990s?," CEPR Discussion Papers 4485, C.E.P.R. Discussion Papers.
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  4. Nelson, Richard R., 2004. "The market economy, and the scientific commons," Research Policy, Elsevier, vol. 33(3), pages 455-471, April.
  5. Timothy F. Bresnahan & Shane Greenstein, 1997. "Technological Competition and the Structure of the Computer Industry," Working Papers 97028, Stanford University, Department of Economics.
  6. Shiller, Robert J, 1981. "Do Stock Prices Move Too Much to be Justified by Subsequent Changes in Dividends?," American Economic Review, American Economic Association, vol. 71(3), pages 421-36, June.
  7. Pindyck, Robert S., 1983. "Risk, inflation, and the stock market," Working papers 1423-83., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  8. Campbell, John, 2000. "Asset Pricing at the Millennium," Scholarly Articles 3294737, Harvard University Department of Economics.
  9. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August.
  10. Paul Geroski & Mariana Mazzucato, 2002. "Learning and the sources of corporate growth," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 623-644, August.
  11. John Y. Campbell & Robert J. Shiller, 1988. "Stock Prices, Earnings and Expected Dividends," Cowles Foundation Discussion Papers 858, Cowles Foundation for Research in Economics, Yale University.
  12. Mariana Mazzucato, 2003. "Risk, variety and volatility: growth, innovation and stock prices in early industry evolution," Journal of Evolutionary Economics, Springer, vol. 13(5), pages 491-512, December.
  13. Darren Filson, . "The Nature and Effects of Technological Change Over the Industry Life Cycle," Claremont Colleges Working Papers 2000-05, Claremont Colleges.
  14. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
  15. Mariana Mazzucato, 2002. "The PC Industry: New Economy or Early Life-Cycle?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 318-345, April.
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