Leapfrogging cycles in international competition

Furukawa, Yuichi

doi:10.1007/s00199-014-0850-y

Cited by 8 publications

(6 citation statements)

References 62 publications

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“…Most of these papers focus on an expanding variety model characterized by innovation cycles in which the mechanism underlying economic fluctuations varies from the existence of different investment regimes (Matsuyama (1999) and Matsuyama (2001)) to international trade and foreign spillovers (Furukawa (2015)). Others focus instead on the mutual relation between human capital investments and productivity growth (Kaas and Zink (2007)).…”

Section: Introductionmentioning

confidence: 99%

Endogenous growth and technological progress with innovation driven by social interactions

Marsiglio

Tolotti

2016

Econ Theory

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We analyze the implications of innovation and social interactions on economic growth in a stylized endogenous growth model with heterogeneous research firms. A large number of research firms decide whether to innovate or not, by taking into account what competitors (i.e., other firms) do. This is due to the fact that their profits partly depend on an externality related to the share of firms which actively engage in research activities. Such a share of innovative firms also determines the evolution of technology in the macroeconomy, which ultimately drives economic growth. We show that when the externality effect is strong enough multiple BGP equilibria may exist. In such a framework, the economy may face a low growth trap suggesting that it may end up in a situation of slow long-run growth; however, such an outcome may be fully solved by government intervention. We also show that whenever multiple BGP exist, they are metastable meaning that the economy may cyclically fluctuate between the low and high BGP as a result of shocks affecting the individual behavior of research firms. Forthcoming in Economic Theory AbstractWe analyze the implications of innovation and social interactions on economic growth in a stylized endogenous growth model with heterogenous research firms. A large number of research firms decide whether to innovate or not, by taking into account what competitors (i.e., other firms) do. This is due to the fact that their profits partly depend on an externality related to the share of firms which actively engage in research activities. Such a share of innovative firms also determines the evolution of technology in the macroeconomy, which ultimately drives economic growth. We show that when the externality effect is strong enough multiple BGP equilibria may exist. In such a framework, the economy may face a low growth trap suggesting that it may end up in a situation of slow long run growth; however, such an outcome may be fully solved by government intervention. We also show that whenever multiple BGP exist, they are metastable meaning that the economy may cyclically fluctuate between the low and high BGP as a result of shocks affecting the individual behavior of research firms.

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Section: Introductionmentioning

confidence: 99%

Endogenous growth and technological progress with innovation driven by social interactions

Marsiglio

Tolotti

2016

Econ Theory

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“…We also contribute to the theoretical literature on innovation cycles by identifying the love of novelty as a novel factor for cyclical innovation (Judd (1985), Shleifer (1986), Deneckere and Judd (1992), Gale (1996), Francois and Shi (1999), Matsuyama (1999Matsuyama ( , 2001, Furukawa (2015), Sunaga (2017), and Yano and Furukawa (2023)). In the main analysis, following this theoretical literature, we assume that the innovator can enjoy only a single-period monopoly, and we demonstrate that when the love of novelty is moderate, innovation is cyclical on an equilibrium path.…”

Section: Related Literaturementioning

confidence: 99%

Love of novelty: a source of innovation-based growth… or underdevelopment traps?

2023

Self Cite

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This study develops a new dynamic general equilibrium model to explore the role of people’s love of novelty as a cultural preference in innovation and innovation-based growth. The model considers (a) an infinitely lived representative consumer who has standard love-of-variety preferences for differentiated products and additional love-of-novelty preferences for new products and (b) technological progress driven by two costly and time-consuming innovation activities, new product development and existing product development. We demonstrate that consumers’ love of novelty is a source of innovation-based growth, wherein economies with a moderate love of novelty can achieve innovation and long-run growth through endogenous cycles between periods in which new product development is active and those in which existing product development is active. However, if love of novelty preference is too weak or too strong, the economy is caught in an underdevelopment trap with less innovation and no long-run growth. We also provide some suggestive empirical evidence that supports our theoretical predictions.

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“…See, for example, Taylor (1993Taylor ( , 1994. 7 Peretto (2003), Davis and Hashimoto (2014), Furukawa (2015), and Kapur (2015) also present two-country R&Dbased growth models in which all countries invest in R&D. 8 Chu and Peng (2011) also consider incomplete patent breadth in a North-South quality-ladder model. 9 This assumption simplifies the analysis and highlights the effect on the economy of IPR protection through the trade in intermediate goods.…”

Section: Householdsmentioning

confidence: 99%

“… Peretto (), Davis and Hashimoto (), Furukawa (), and Kapur () also present two‐country R&D‐based growth models in which all countries invest in R&D.…”

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confidence: 99%

On the trade, growth, and welfare effects of intellectual property rights protection

Saito

2018

Southern Economic Journal

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To examine how intellectual property rights protection affects trade, growth, and welfare, I develop a two‐country R&D‐based growth model in which final goods firms in both countries determine the range of imported varieties in the overall use of intermediate inputs. I show that strengthening patent protection in either country increases the range of imported varieties of intermediate goods and stimulates economic growth in the country that strengthened patent protection. Moreover, I also show that the Nash equilibrium level of patent protection is stronger than the globally optimal level of patent protection.

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Leapfrogging cycles in international competition

Cited by 8 publications

References 62 publications

Endogenous growth and technological progress with innovation driven by social interactions

Endogenous growth and technological progress with innovation driven by social interactions

Love of novelty: a source of innovation-based growth… or underdevelopment traps?

On the trade, growth, and welfare effects of intellectual property rights protection

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