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Structural change and financing constraints

  • Ilyina, Anna
  • Samaniego, Roberto

In a multi-industry growth model, firms need external funds for productivity-enhancing R&D, and face financing constraints. The cost of research differs across industries, so financing constraints hinder industry productivity growth unevenly. Equilibrium industry dynamics map into a differences-in-differences regression specification where industry growth depends on the interaction between country financial development and industry R&D intensity. The paper provides a framework for interpreting several empirical results that rely on industry growth data in terms of R&D-induced technology transfer, and identifies a new channel for finance to encourage aggregate growth: the reallocation of resources towards sectors with rapidly expanding technological frontiers.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 59 (2012)
Issue (Month): 2 ()
Pages: 166-179

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Handle: RePEc:eee:moneco:v:59:y:2012:i:2:p:166-179
DOI: 10.1016/j.jmoneco.2011.12.002
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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  18. Samaniego, Roberto, 2009. "Financing Creative Destruction," MPRA Paper 22348, University Library of Munich, Germany.
  19. Terleckyj, Nestor E, 1980. "What Do R & D Numbers Tell Us about Technological Change?," American Economic Review, American Economic Association, vol. 70(2), pages 55-61, May.
  20. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
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