Intellectual property rights, technical progress and the volatility of economic growth

Abstract

In this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980's. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US. Keywords Intellectual Property Rights, Technical Progress and the Volatility of Economic Growth March 2012 AbstractIn this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980's. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US.

Endogenous growth and intellectual property rights: A north–south modeling proposal

“…Moreover, as we have discussed above, this effect can be ambiguous. On the one hand, there are studies that argue for a positive relationship between IPR enforcement and economic growth (see for instance Falvey et al, 2009, andChu et al, 2012), while others present a negative one, a result dependent on certain features or even an inconclusive result (see, e.g., Horii and Iwaisako, 2007;Datta and Mohtadi, 2006;Furukawa, 2010). On the other hand, in general, empirical evidence suggests a positive effect of IPR on economic growth (see Azevedo et al, 2012).…”

“…According to Falvey et al (2009) and Chu et al (2012), we would expect a positive impact of stronger IPR on economic growth. Indeed, increasing patent protection raises the R&D incentives and improves technological progress, which in turn decreases economic growth volatility, proving that a superior patent breadth leads to a higher expected growth rate.…”

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations

“…Hence, statistical moments are not well defined in the raw data, and we need to appropriately "de-trend" the data. Second, it is well known that the growth of GDP and other aggregate variables are stochastic (Chu et al, 2012;Durlauf and Quah, 1999;King et al, 1988;Leung and Quah, 1996;Tang et al, 2008). It means that the traditional method of removing a linear trend would not be appropriate.…”

Does Scientific and Technical Research Reduce Macroeconomic Volatility?

“…Chu et al . () go further to show that the protection of intellectual property rights (IPR) is important. An improvement in IPR protection could stimulate more investment on S&T research and reduce macroeconomic volatility.…”