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Working Paper
Financing Ventures
The relationship between venture capital and growth is examined using an endogenous growth model incorporating dynamic contracts between entrepreneurs and venture capitalists. At each stage of financing, venture capitalists evaluate the viability of startups. If viable, venture capitalists provide funding for the next stage. The success of a project depends on the amount of funding. The model is confronted with stylized facts about venture capital: statistics by funding round concerning success rates, failure rates, investment rates, equity shares, and IPO values. The increased efficiency ...
Working Paper
Localized Knowledge Spillovers: Evidence from the Spatial Clustering of R&D Labs and Patent Citations
SUPERCEDES EORKING PAPER 17-32 Buzard et al. (2017) show that American R&D labs are highly spatially concentrated even within a given metropolitan area. We argue that the geography of their clusters is better suited for studying knowledge spillovers than are states, metropolitan areas, or other political or administrative boundaries that have predominantly been used in previous studies. In this paper, we assign patents and citations to these newly defined clusters of R&D labs. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small ...
Working Paper
Lockdowns and Innovation: Evidence from the 1918 Flu Pandemic
Does social distancing harm innovation? We estimate the effect of non-pharmaceutical interventions (NPIs)—policies that restrict interactions in an attempt to slow the spread of disease—on local invention. We construct a panel of issued patents and NPIs adopted by 50 large US cities during the 1918 flu pandemic. Difference-in-differences estimates show that cities adopting longer NPIs did not experience a decline in patenting during the pandemic relative to short-NPI cities, and recorded higher patenting afterward. Rather than reduce local invention by restricting localized knowledge ...
Working Paper
A Theory of Falling Growth and Rising Rents
Growth has fallen in the U.S. amid a rise in firm concentration. Market share has shifted to low labor share firms, while within-firm labor shares have actually risen. We propose a theory linking these trends in which the driving force is falling overhead costs of spanning multiple products or a rising efficiency advantage of large firms. In response, the most efficient firms (with higher markups) spread into new product lines, thereby increasing concentration and generating a temporary burst of growth. Eventually, due to greater competition from efficient firms, within-firm markups and ...
Report
The Global Financial Resource Curse
Since the late 1990s, the United States has received large capital flows from developing countries and experienced a productivity growth slowdown. Motivated by these facts, we provide a model connecting international financial integration and global productivity growth. The key feature is that the tradable sector is the engine of growth of the economy. Capital flows from developing countries to the United States boost demand for U.S. non-tradable goods. This induces a reallocation of U.S. economic activity from the tradable sector to the non-tradable one. In turn, lower profits in the ...
Working Paper
The Agglomeration of American Research and Development Labs
We employ a unique data set to examine the spatial clustering of about 1,700 private research and development (R&D) labs in California and across the Northeast corridor of the United States. Using these data, which contain the R&D labs? complete addresses, we are able to more precisely locate innovative activity than with patent data, which only contain zip codes for inventors? residential addresses. We avoid the problems of scale and borders associated with using fixed spatial boundaries, such as zip codes, by developing a new point pattern procedure. Our multiscale core-cluster approach ...
Working Paper
The Expansion of Varieties in the New Age of Advertising
The last decades have seen large improvements in digital advertising technology that allowed firms to better target specific consumer tastes. This research studies the relationship among digital advertising, the rise of varieties, and economic welfare. We develop a model of advertising and varieties where firms choose the intensity of digital ads directed at specific consumers as well as traditional ads that are undirected. The calibrated model shows that improvements in digital advertising have driven the rise in varieties over time. Empirical evidence is presented using detailed micro data ...
Report
The dual nature of trade: measuring its impact on imitation and growth
Imports of goods that embody foreign technology raise a country's output directly as inputs into production and indirectly through reverse-engineering of these goods, which contributes to domestic imitation and innovation. This paper first quantifies spillovers from high-technology imports from developed countries to domestic imitation and innovation in both developed and developing countries. It then considers the contribution of foreign and domestic innovation to real per capita GDP growth. ; International patent data for forty countries from 1970 to 1985 are used to create proxies for ...
Working Paper
Localized Knowledge Spillovers: Evidence from the Spatial Clustering of R&D Labs and Patent Citations
Patent citations are a commonly used indicator of knowledge spillovers among inventors, while clusters of research and development labs are locations in which knowledge spillovers are particularly likely to occur. In this paper, we assign patents and citations to newly defined clusters of American R&D labs to capture the geographic extent of knowledge spillovers. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small spatial scales and diminishes rapidly with distance. On average, patents within a cluster are about three to six ...
Working Paper
Nothing is Certain Except Death and Taxes : The Lack of Policy Uncertainty from Expiring \"Temporary\" Taxes
What is the policy uncertainty surrounding expiring taxes? How uncertain are the approvals of routine extensions of temporary tax policies? To answer these questions, I use event studies to measure cumulative abnormal returns (CARs) for firms that claimed the U.S. research and development (R&D) tax credit from 1996-2015. In 1996, the U.S. R&D tax credit was statutorily temporary but was routinely extended ten times until 2015, when it was made permanent. I take the event dates as both when these ten extensions of the R&D tax credit were introduced into committee and when the extensions were ...