Technological innovation, resource allocation, and growth

Leonid Kogan, Dimitris Papanikolaou, Amit Seru, Noah Stoffman

Research output: Contribution to journalArticlepeer-review

207 Scopus citations

Abstract

We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to U.S. firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent-level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations the patent receives in the future. Our new measure is associated with substantial growth, reallocation, and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.

Original languageEnglish (US)
Pages (from-to)665-712
Number of pages48
JournalQuarterly Journal of Economics
Volume132
Issue number2
DOIs
StatePublished - 2017

ASJC Scopus subject areas

  • Economics and Econometrics

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