R&D? A Small Contribution to Productivity Growth

In this paper I calibrate the contribution of R&D investments to productivity growth. The basis for the analysis is the free entry condition. This yields a relationship between the resources devoted to R&D and the growth rate of technology. Since innovators are small, this relationship is not directly a¥ected by the size of the R&D externalities, the presence of scale effects or diminishing returns in R&D after controlling for the growth rate of output and the interest rate. The resulting contribution of R&D to productivity growth in the US is smaller than three to five tenths of one percentage point. Interestingly, this constitutes an upper bound for the case where innovators internalize the consequences of their R&D investments on the cost of conducting future innovations. From a normative perepective, this analysis implies that, if the innovation technology takes the form assumed in the literature, the actual US R&D intensity may be the socially optimal.RESEARCH AND DEVELOPMENT; PRODUCTIVITY GROWTH; TOTAL FACTOR PRODUCTIVITY

Using Investment Data to Assess the Importance of Price Mismeasurement

This paper presents a new approach to assess the role of price mismeasurement in the productivity slowdown. I invert the firm's investment decision to identify the embodied and disembodied components of productivity growth. With a Cobb-Douglas production function, output price mismeasurement only should affect the latter. Contrary to the mismeasurement hypothesis, I find that in the Post-War period, disembodied productivity grew faster in the hard-to-measure than in the non-manufacturing easy-to-measure sectors, and that disembodied productivity slowed down less in the hard-to-measure than in the easy-to-measure sectors since the 70's. These results hold a fortiori when capital and labor are complements.INVESTMENT; PRICE MISMEASUREMENT; PRODUCTIVITY SLOWDOWN; TOTAL FACTOR PRODUCTIVITY ;EMBODIED AND DISEMBODIED PRODUCTIVITY

Two Ways to Rule Out the Overconsumption Paths in the Ramsey Model with Irreversible Investment

In this note I develop two approaches to rule out the overconsumption paths in the Ramsey model with irreversible capital. The ørst focuses on the multiplier of the irreversible constraint and is applied to the situation where preferences are CES and the production function is Cobb-Douglas. The second, relies on a revealed preference argument and is used to rule out overconsumption paths when the preferences are strictly concave and the initial level of per effective capital is below its steady state level.RAMSEY GROWTH MODEL; IRREVERSIBLE CAPITAL; OVERCONSUMPTION PATHS

Cross-Country Technology Adoption: Making the Theories Face the Facts.

We examine the diffusion of more than twenty technologies across twenty-three of the world ’s leading industrial economies. Our evidence covers major technology classes such as textile production, steel manufacture, communications, information technology, transportation, and electricity for the period 1788-2001. We document the common patterns observed in the diffusion of this broad range of technologies. Our results suggest a pattern of trickle-down diffusion that is remarkably robust across technologies. Most of the technologies that we consider originate in advanced economies and are adopted there first. Subsequently, they trickle down to countries that lag economically. Our panel data analysis indicates that the most important determinants of the speed at which a country adopts technologies are the country’s human capital endowment, type of government, degree of openness to trade, and adoption of predecessor technologies. We also find that the overall rate of diffusion has increased markedly since World War II because of the convergence in these variables across countries.ECONOMIC GROWTH; HISTORICAL DATA; TECHNOLOGY ADOPTION.

Medium Term Business Cycles

Over the postwar, the U.S., Europe and Japan have experienced what may be thought of as medium frequency oscillations between persistent periods of robust growth and persistent periods of relative stagnation. These medium frequency movements, further, appear to bear some relation to the high frequency volatility of output. That is, periods of stagnation are often associated with significant recessions, while persistent booms typically are either free of recessions or are interrupted only by very modest downturns. In this paper we explore the idea of medium term cycles, which we define as reflecting the sum of the high and medium frequency variation in the data. We develop a methodology for identifying these kinds of fluctuations and then show that a number of important macroeconomic time series exhibit significant medium term cycles. The cycles feature strong procyclical movements in both disembodied and embodied technological change, research & development, and the efficiency of resource utilization. We then develop a model to explain the medium term cycle that features both disembodied and embodied endogenous technological change, along with countercyclical markups and variable factor utilization. The model is able to generate medium term fluctuations in output, technological change, and resource utilization that resemble the data, with a non-technological shock as the exogenous disturbance. In particular, the model offers a unified approach to explaining both high and medium frequency variation in aggregate business activity.BUSINESS CYCLE; ENDOGENOUS TECHNOLOGICAL CHANGE.

When does domestic saving matter for economic growth?

Can a country grow faster by saving more? We address this question both theoretically and empirically. In our model, growth results from innovations that allow local sectors to catch up with the frontier technology. In relatively poor countries, catching up with the frontier requires the involvement of a foreign investor, who is familiar with the frontier technology, together with effort on the part of a local bank, who can directly monitor local projects to which the technology must be adapted. In such a country, local saving matters for innovation, and therefore growth, because it allows the domestic bank to cofinance projects and thus to attract foreign investment. But in countries close to the frontier, local firms are familiar with the frontier technology, and therefore do not need to attract foreign investment to undertake an innovation project, so local saving does not matter for growth. In our empirical exploration we show that lagged savings is significantly associated with productivity growth for poor but not for rich countries. This effect operates entirely through TFP rather than through capital accumulation. Further, we show that savings is significantly associated with higher levels of FDI inflows and equipment imports and that the effect that these have on growth is significantly larger for poor countries than rich

An Uncertainty-Driven Theory of the Productivity Slowdown: Manufacturing

This paper presents a theory of the productivity slowdown based on the effects that uncertainty has on the productivity of specialized capital. Uncertainty reduces the efficiency of inflexible capital and generates a slowdown. It also increases the demand for flexible capital which retains its productivity in the new volatile environment. The increase in the share of flexible capital explains the acceleration of the rate of productivity growth embodied in new capital observed by McHugh and Lane [1987]. This fact is difficult to explain by the theories that emphasize the cost of implementing the new technologies as the cause of the slowdown. The model also highlights the positive effect that uncertainty has on the speed of diffusion of technologies, and on the rate of technological progress. These relationships are successfully tested in manufacturing and are used to explain the rapid diffusion of computers and the spectacular TFP growth rate of the computer producing sectors.PRODUCTIVITY SLOWDOWN; UNCERTAINTY; SPECIALIZED CAPITAL; FLEXIBILITY

Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence

We examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn. We motivate, develop and estimate a model with an endogenous TFP mechanism that allows for costly development and adoption of technologies. Our main finding is that a significant fraction of the post-Great Recession fall in productivity was an endogenous phenomenon, suggesting that demand factors played an important role in the post-crisis slowdown of capacity growth. More generally, we provide insight into why recoveries from financial crises may be so slow

A systematic comparison of supervised classifiers

Pattern recognition techniques have been employed in a myriad of industrial, medical, commercial and academic applications. To tackle such a diversity of data, many techniques have been devised. However, despite the long tradition of pattern recognition research, there is no technique that yields the best classification in all scenarios. Therefore, the consideration of as many as possible techniques presents itself as an fundamental practice in applications aiming at high accuracy. Typical works comparing methods either emphasize the performance of a given algorithm in validation tests or systematically compare various algorithms, assuming that the practical use of these methods is done by experts. In many occasions, however, researchers have to deal with their practical classification tasks without an in-depth knowledge about the underlying mechanisms behind parameters. Actually, the adequate choice of classifiers and parameters alike in such practical circumstances constitutes a long-standing problem and is the subject of the current paper. We carried out a study on the performance of nine well-known classifiers implemented by the Weka framework and compared the dependence of the accuracy with their configuration parameter configurations. The analysis of performance with default parameters revealed that the k-nearest neighbors method exceeds by a large margin the other methods when high dimensional datasets are considered. When other configuration of parameters were allowed, we found that it is possible to improve the quality of SVM in more than 20% even if parameters are set randomly. Taken together, the investigation conducted in this paper suggests that, apart from the SVM implementation, Weka's default configuration of parameters provides an performance close the one achieved with the optimal configuration

Resolving the nature of electronic excitations in resonant inelastic x-ray scattering

The study of elementary bosonic excitations is essential toward a complete description of quantum electronic solids. In this context, resonant inelastic X-ray scattering (RIXS) has recently risen to becoming a versatile probe of electronic excitations in strongly correlated electron systems. The nature of the radiation-matter interaction endows RIXS with the ability to resolve the charge, spin and orbital nature of individual excitations. However, this capability has been only marginally explored to date. Here, we demonstrate a systematic method for the extraction of the character of excitations as imprinted in the azimuthal dependence of the RIXS signal. Using this novel approach, we resolve the charge, spin, and orbital nature of elastic scattering, (para-)magnon/bimagnon modes, and higher energy dd excitations in magnetically-ordered and superconducting copper-oxide perovskites (Nd2CuO4 and YBa2Cu3O6.75). Our method derives from a direct application of scattering theory, enabling us to deconstruct the complex scattering tensor as a function of energy loss. In particular, we use the characteristic tensorial nature of each excitation to precisely and reliably disentangle the charge and spin contributions to the low energy RIXS spectrum. This procedure enables to separately track the evolution of spin and charge spectral distributions in cuprates with doping. Our results demonstrate a new capability that can be integrated into the RIXS toolset, and that promises to be widely applicable to materials with intertwined spin, orbital, and charge excitations