How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy

Cozzi, Guido and Pataracchia, Beatrice and Ratto, Marco and Pfeiffer, Philipp (2017): How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy.

Abstract

The macroeconomic experience of the last decade stressed the importance of jointly studying the growth and business cycle fluctuations behavior of the economy. To analyze this issue, we embed a model of Schumpeterian growth into an estimated medium-scale DSGE model. Results from a Bayesian estimation suggest that Investment risk premia are a key driver of the slump following the Great Recession. Endogenous innovation dynamics amplifies financial crises and helps explain the slow recovery. Moreover, financial conditions also account for a substantial share of R&D Investment dynamics.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endogenous growth; New Keynesian Economics; R&D; Schumpeterian Growth; Bayesian Estimation.
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models

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