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Patent-Based News Shocks

Author

Listed:
  • Danilo Cascaldi-Garcia

    (Federal Reserve Board)

  • Marija Vukotic

    (University of Warwick)

Abstract

What do patents tell us about the economic effects of future technological improvements? We identify aggregate and industry-level patent-based news shocks by exploiting changes in stock market valuations of firms that obtain patent grants. Our shocks resemble diffusion news: they do not affect total factor productivity in the short run but induce a strong permanent effect after five years. We find that patent-based news shocks produce positive co-movement between consumption, output, investment, and hours. They also generate positive responses in inflation and in the federal funds rate, consistent with standard New Keynesian models.

Suggested Citation

  • Danilo Cascaldi-Garcia & Marija Vukotic, 2022. "Patent-Based News Shocks," The Review of Economics and Statistics, MIT Press, vol. 104(1), pages 51-66, March.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:1:p:51-66
    DOI: 10.1162/rest_a_00943
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    Citations

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    Cited by:

    1. Haddad, Valentin & Ho, Paul & Loualiche, Erik, 2022. "Bubbles and the value of innovation," Journal of Financial Economics, Elsevier, vol. 145(1), pages 69-84.
    2. Cascaldi-Garcia, Danilo & Vukoti, Marija & Zubairy, Sarah, 2023. "Innovation During Challenging Times," The Warwick Economics Research Paper Series (TWERPS) 1475, University of Warwick, Department of Economics.
    3. repec:rim:rimwps:21-26 is not listed on IDEAS
    4. Cascaldi-Garcia, Danilo, 2025. "Forecast revisions as instruments for news shocks," Journal of Monetary Economics, Elsevier, vol. 151(C).
    5. Klein, Mathias & Linnemann, Ludger, 2021. "Real exchange rate and international spillover effects of US technology shocks," Journal of International Economics, Elsevier, vol. 129(C).
    6. Görtz, Christoph & Gunn, Christopher & Lubik, Thomas A., 2022. "Is there news in inventories?," Journal of Monetary Economics, Elsevier, vol. 126(C), pages 87-104.
    7. repec:rim:rimwps:21-25 is not listed on IDEAS
    8. Rünstler, Gerhard, 2024. "The macroeconomic impact of euro area labor market reforms: evidence from a narrative panel VAR," European Economic Review, Elsevier, vol. 168(C).
    9. Nils M. Gornemann & Pablo Guerrón-Quintana & Felipe Saffie, 2020. "Exchange Rates and Endogenous Productivity," International Finance Discussion Papers 1301, Board of Governors of the Federal Reserve System (U.S.).
    10. Damiano Di Francesco & Omar Pietro Carnevale, 2025. "Are Hysteresis Effects Nonlinear?," LEM Papers Series 2025/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Anastasios Evgenidis & Apostolos Fasianos, 2025. "AI news shocks and the macroeconomy: evidence from UK patent data," IFS Working Papers W25/48, Institute for Fiscal Studies.
    12. Görtz, Christoph & Yeromonahos, Mallory, 2022. "Asymmetries in risk premia, macroeconomic uncertainty and business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 137(C).
    13. Tavneet Kaur & Khushdeep Dharni, 2026. "Stock price reaction to patent related news: a study of indian manufacturing sector," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 53(1), pages 151-165, March.
    14. Miranda-Agrippino, Silvia & Hacıoğlu Hoke, Sinem & Bluwstein, Kristina, 2020. "Patents, News, and Business Cycles," CEPR Discussion Papers 15062, C.E.P.R. Discussion Papers.
    15. Andrea Recine & Massimiliano Tancioni, 2025. "Macroeconomic Effects of Government Defense and Non-Defense R&D," Working Papers in Public Economics 262, Department of Economics and Law, Sapienza University of Rome.
    16. Oscar Jaulin & Andrey Ramos, 2025. "Becoming Green: Decomposing the Macroeconomic Effects of Green Technology News Shocks," Papers 2507.18386, arXiv.org.
    17. Mishel Ghassibe & Boromeus Wanengkirtyo & Ivan Yotzov, 2025. "Intertemporal Pass-Through," Working Papers 1524, Barcelona School of Economics.
    18. Antonova, Anastasiia & Matvieiev, Mykhailo, 2025. "News and firm entry: The role of the waiting option," Journal of Economic Dynamics and Control, Elsevier, vol. 171(C).

    More about this item

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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