Innovation and Finance: An SFC Analysis of Great Surges of Development
Schumpeter, a century ago, argued that boom-and-bust cycles are intrinsically related to the functioning of a capitalistic economy. These cycles, inherent to the rise of innovation, are an unavoidable consequence of the way in which markets evolve and assimilate successive technological revolutions. Furthermore, Schumpeter's analysis stressed the fundamental role played by finance in fostering innovation, in defining bank credit as the "monetary complement" of innovation. Nevertheless, we feel that the connection between innovation and firm financing has seldom been examined from a theoretical standpoint, not only by economists in general, but even within the Neo-Schumpeterian research line. Our paper aims at analyzing both the long-term structural change process triggered by innovation and the related financial dynamics inside the coherent framework provided by the stock-flow consistent (SFC) approach. The model presents a multisectoral economy composed of consumption and capital goods industries, a banking sector, and two household sectors: capitalists and wage earners. The SFC approach helps us to track the flows of funds resulting from the rise of innovators in the system. The dynamics of prices, employment, and wealth distribution among the different sectors and social groups is analyzed. Above all, the essential role of finance in fostering innovation and its interaction with the real economy is underlined.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seppecher, Pascal, 2012.
"Flexibility Of Wages And Macroeconomic Instability In An Agent-Based Computational Model With Endogenous Money,"
Cambridge University Press, vol. 16(S2), pages 284-297, September.
- Pascal Seppecher, 2010. "Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money," Post-Print hal-00661956, HAL.
- Pascal Seppecher, 2012. "Flexibility of wages and macroeconomic instability in an agent-based computational model with endogenous money," Post-Print halshs-00727050, HAL.
- Giulio Bottazzi & Angelo Secchi & Federico Tamagni, 2008. "Productivity, profitability and financial performance," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 711-751, August.
- Giulio Bottazzi & Angelo Secchi & Federico Tamagni, 2006. "Productivity, Profitability and Financial Fragility: Evidence from Italian Business Firms," LEM Papers Series 2006/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115, March.
- Domenico Gatti & Edoardo Gaffeo & Mauro Gallegati, 2010. "Complex agent-based macroeconomics: a manifesto for a new paradigm," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 5(2), pages 111-135, December.
- Gennaro Zezza, 2004. "Some Simple, Consistent Models of the Monetary Circuit," Macroeconomics 0405006, EconWPA.
- Gennaro Zezza, 2004. "Some Simple, Consistent Models of the Monetary Circuit," Economics Working Paper Archive wp_405, Levy Economics Institute.
- James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, 02.
- Andrea Mina & Henry Lahr & Alan Hughes, 2013. "The demand and supply of external finance for innovative firms," Industrial and Corporate Change, Oxford University Press, vol. 22(4), pages 869-901, August.
- Castellacci, Fulvio, 2008. "Innovation and the competitiveness of industries: comparing the mainstream and the evolutionary approaches," MPRA Paper 27523, University Library of Munich, Germany.
- Stephen Kinsella & Matthias Greiff & Edward J Nell, 2011. "Income Distribution in a Stock-Flow Consistent Model with Education and Technological Change," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(1), pages 134-149.
- 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.
- Mariana Mazzucato, 2003. "Risk, Variety and Volatility in the Early Auto and PC Industry," Open Discussion Papers in Economics 41, The Open University, Faculty of Social Sciences, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:lev:wrkpap:wp_733. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Dunn)
If references are entirely missing, you can add them using this form.