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Coordination Frictions and Economic Growth

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  • Miroslav Gabrovski

    (University of Hawaii at Manoa)

Abstract

In practice, firms face a mass of scarce innovation projects. They choose one research avenue towards which to direct their effort, but do not coordinate these choices. This gives rise to coordination frictions. This paper develops an expanding-variety growth model to study the impact of these frictions on the economy. The coordination failure generates a mass of foregone innovation and reduces the economy-wide research intensity. Both effects decrease the growth rate. Because of this, the frictions also amplify the fraction of wasteful simultaneous innovation. A calibration suggests the impact of coordination frictions on the growth rate and welfare is substantial.

Suggested Citation

  • Miroslav Gabrovski, 2018. "Coordination Frictions and Economic Growth," Working Papers 201810, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:201810
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    Cited by:

    1. Miroslav Gabrovski, 2020. "Simultaneous Innovation and the Cyclicality of R&D," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 122-133, April.

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    More about this item

    Keywords

    Growth; Frictions; Coordination; Simultaneous Innovation; Search for Ideas;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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