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Matrix Exponential Stochastic Volatility with Cross Leverage

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  • Tsuyoshi Nakamura

    (Department of Economics, Tokyo Keizai Univeristy)

  • Hiroshi Ohashi

    (Faculty of Economics, University of Tokyo)

Abstract

This paper examines the economic impact of re-invention - the degree to which an innovation is modified by user - on industry growth and productivity. The paper focuses on two re-inventions made by a Japanese steel company; these inventions improved the productive efficiency of Austrian-made refining technology, namely, basic oxygen furnace (BOF). Results obtained from the plant-level production-function estimation indicate that re-inventions account for approximately 30 percent of the total factor productivity of the BOF, substantially promoting the dissemination of the BOF technology. Our simulation analysis indeed reveals that re-inventions contributed to steel output growth by about 14 percent. This paper also documents that innovating companies played the role of a "lead user" in developing and disseminating their re-invented technologies.

Suggested Citation

  • Tsuyoshi Nakamura & Hiroshi Ohashi, 2011. "Matrix Exponential Stochastic Volatility with Cross Leverage," CIRJE F-Series CIRJE-F-813, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2011cf813
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2011/2011cf813.pdf
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    References listed on IDEAS

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    1. Eric von Hippel, 1986. "Lead Users: A Source of Novel Product Concepts," Management Science, INFORMS, vol. 32(7), pages 791-805, July.
    2. Klette, Tor Jakob & Griliches, Zvi, 1996. "The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Endogenous," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(4), pages 343-361, July-Aug..
    3. Ohashi, Hiroshi, 2005. "Learning by doing, export subsidies, and industry growth: Japanese steel in the 1950s and 1960s," Journal of International Economics, Elsevier, vol. 66(2), pages 297-323, July.
    4. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    5. Alessandro Nuvolari, 2004. "Collective invention during the British Industrial Revolution: the case of the Cornish pumping engine," Cambridge Journal of Economics, Oxford University Press, vol. 28(3), pages 347-363, May.
    6. Tsuyoshi Nakamura & Hiroshi Ohashi, 2008. "EFFECTS OF TECHNOLOGY ADOPTION ON PRODUCTIVITY AND INDUSTRY GROWTH: A STUDY OF STEEL REFINING FURNACES -super-," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 470-499, September.
    7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    8. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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