Innovation and Endogenous Growth over the Business Cycle with Frictional Labor Markets

• Autorzy: Marcin Bielecki
• Języki publikacji: EN

Abstrakty

EN

This paper proposes a microfounded model featuring frictional labor markets that generates procyclical R&D expenditures as a result of optimizing behavior by heterogeneous monopolistically competitive firms. This allows to show that business cycle fluctuations affect the aggregate endogenous growth rate of the economy. Consequently, transitory shocks leave lasting level effects. This mechanism is responsible for economically significant hysteresis effects that significantly increase the welfare cost of business cycles relative to the exogenous growth model. I show that this has serious policy implications and creates ample space for policy intervention. I find that several static and countercyclical subsidy schemes are welfare improving. Importantly, I find that due to labor market frictions subsidizing incumbent firms generates large and positive welfare effects. (original abstract)

Słowa kluczowe

EN

Business cycles; Endogenous growth; Innovations; Labour market

PL

Cykl koniunkturalny; Wzrost endogeniczny; Innowacje; Rynek pracy

• Czasopismo: Central European Journal of Economic Modelling and Econometrics (CEJEME)
• Rocznik: 2022
• Tom: 14
• Numer: nr 3
• Strony: 263--302

Twórcy

autor

Marcin Bielecki

• University of Warsaw; Narodowy Bank Polski

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Identyfikatory

DOI

10.24425/cejeme.2022.142711