Chu, Angus C. and Leung, Charles Ka Yui and TANG, C. H. Edward (2012): Intellectual property rights, technical progress and the volatility of economic growth.
Download (246kB) | Preview
In this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980’s. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US.
|Item Type:||MPRA Paper|
|Original Title:||Intellectual property rights, technical progress and the volatility of economic growth|
|Keywords:||Economic growth; Intellectual property rights; Growth volatility|
|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 > O34 - Intellectual Property and Intellectual Capital
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
|Depositing User:||Chi Ho TANG|
|Date Deposited:||16. Apr 2012 12:41|
|Last Modified:||14. Feb 2013 19:46|
Acemoglu, D., and Akcigit, U., 2012. Intellectual property rights policy, competition and innovation. Journal of the European Economic Association, 10, 1-42.
Acemoglu, D., and Zilibotti, F., 1997. Was Prometheus unbound by chance? Risk, diversification, and growth. Journal of Political Economy, 105, 709-751.
Aghion, P., and Banerjee, A., 2005. Volatility and Growth. Oxford: Oxford University Press.
Bernstein, J., and Nadiri, M.I., 1988. Interindustry R&D spillovers, rates of return, and production in high-tech industries. American Economic Review, 78, 429-434.
Bernstein, J., and Nadiri, M.I., 1989. Research and development and intra-industry spillovers: An empirical application of dynamic duality. Review of Economic Studies, 56, 249-267.
Chen, B., and Chu, A., 2010. On R&D spillovers, multiple equilibria and indeterminacy. Journal of Economics, 100, 247-263.
Chen, M., and Iyigun, M., 2011. Patent protection and strategic delays in technology development: Implications for economic growth. Southern Economic Journal, 78, 211-232.
Chu, A., 2009. Effects of blocking patents on R&D: A quantitative DGE analysis. Journal of Economic Growth, 14, 55-78.
Chu, A., 2010a. Effects of patent length on R&D: A quantitative DGE analysis. Journal of Economics, 99, 117-140.
Chu, A., 2010b. Effects of patent policy on income and consumption inequality in an R&D growth model. Southern Economic Journal, 77, 336-350.
Chu, A., 2011. The welfare cost of one-size-fits-all patent protection. Journal of Economic Dynamics and Control, 35, 876-890.
Chu, A., and Furukawa, Y., 2011. On the optimal mix of patent instruments. Journal of Economic Dynamics and Control, 35, 1964-1975.
Chu, A., and Pan, S., 2012. The escape-infringement effect of blocking patents on innovation and economic growth. Macroeconomic Dynamics, forthcoming.
Chu, A., and Peng, S., 2011. International intellectual property rights: Effects on growth, welfare and income inequality. Journal of Macroeconomics, 33, 276-287.
Cozzi, G., 2001. Inventing or spying? Implications for growth. Journal of Economic Growth 6, 55-77.
Cozzi, G., 2007. The Arrow effect under competitive R&D. B.E. Journal of Macroeconomics, 7, Issue 1 (Contributions), Article 2.
Cozzi, G., Giordani, P., and Zamparelli, L., 2007. The refoundation of the symmetric equilibrium in Schumpeterian growth models. Journal of Economic Theory, 136, 788-797.
Cozzi, G., and Spinesi, L., 2006. Intellectual appropriability, product differentiation, and growth. Macroeconomic Dynamics, 10, 39-55.
D’Aspremont, C., and Jacquemin, A., 1988. Cooperative and noncooperative R&D in duopoly with spillovers. American Economic Review, 78, 1133-1137.
Fung, M., Zeng, J., and Zhang, J., 2012. Patents and price regulation in an R&D growth model. Macroeconomic Dynamics, forthcoming.
Furukawa, Y., 2007. The protection of intellectual property rights and endogenous growth: Is stronger always better? Journal of Economic Dynamics and Control, 31, 3644-3670.
Furukawa, Y., 2010. Intellectual property protection and innovation: An inverted-U relationship. Economics Letters, 109, 99-101.
Futagami, K., and Iwaisako, T., 2007. Dynamic analysis of patent policy in an endogenous growth model. Journal of Economic Theory, 132, 306-334.
Ginarte, J., and Park, W., 1997. Determinants of patent rights: A cross-national study. Research Policy, 26, 283-301.
Greenwood, J., and Jovanovic, B., 1990. Financial development, growth and the distribution of income. Journal of Political Economy, 98, 1076-1107.
Grossman, G., and Helpman, E., 1991. Quality ladders in the theory of growth. Review of Economic Studies, 58, 43-61.
Horii, R., and Iwaisako, T., 2007. Economic growth with imperfect protection of intellectual property rights. Journal of Economics, 90, 45-85.
Horowitz, A., and Lai, E., 1996. Patent length and the rate of innovation. International Economic Review, 37, 785-801.
Iwaisako, T., and Futagami, K., 2003. Patent policy in an endogenous growth model. Journal of Economics, 78, 239-258.
Iwaisako, T., and Futagami, K., 2012. Patent protection, capital accumulation, and economic growth. Economic Theory, forthcoming.
Jaffe, A., 1986. Technological opportunity and spillovers of R&D: Evidence from firms’ patents, profits, and market value. American Economic Review, 76, 984-1001.
Jones, C., 1995. R&D-based models of economic growth. Journal of Political Economy, 103, 759-784.
Judd, K., 1985. On the performance of patents. Econometrica, 53, 567-586.
Kamien, M., Muller, E., and Zang, I., 1992. Research joint ventures and R&D cartels. American Economic Review, 82, 1293-1306.
Kanwar, S., and Evenson, R., 2003. Does intellectual property protection spur technological change? Oxford Economic Papers, 55, 235-264.
Koren, M., and Tenreyro, S., 2007a. Volatility and development. Quarterly Journal of Economics, 122, 243-287.
Koren, M., and Tenreyro, S., 2007b. Technological diversification. CEPR Discussion Papers No. 6523.
Kortum, S., 1993. Equilibrium R&D ratio and the patent-R&D ratio: U.S. evidence. American Economic Review, 83, 450-457.
Kwan, Y., and Lai, E., 2003. Intellectual property rights protection and endogenous economic growth. Journal of Economic Dynamics and Control, 27, 853-873.
Laitner, J., and Stolyarov, D., 2011. Derivative ideas and the value of intangible assets. manuscript.
Leung, C., Tang, S., and Groenewold, N., 2006. Growth volatility and technical progress: A simple rent-seeking model. Journal of Economics, 88, 159-178.
Li, C.-W., 2001. On the policy implications of endogenous technological progress. Economic Journal, 111, C164-C179.
Los, B., and Verspagen, B., 2000. R&D spillovers and productivity: Evidence from U.S. manufacturing microdata. Empirical Economics, 25, 127-148.
O’Donoghue, T., and Zweimuller, J., 2004. Patents in a model of endogenous growth. Journal of Economic Growth, 9, 81-123.
Park, W., 2005. Do intellectual property rights stimulate R&D and productivity growth? Evidence from cross-national and manufacturing industries data. In J. Putnam (ed.) Intellectual Property Rights and Innovation in the Knowledge-Based Economy, Calgary: University of Calgary Press.
Park, W., 2008a. International patent protection: 1960-2005. Research Policy 37, 761-766.
Park, W., 2008b. Intellectual property rights and international innovation. In K. Maskus (ed.) Frontiers of Economics and Globalization, vol. 2, 289–327, Amsterdam: Elsevier Science.
Ramey, G., and Ramey, V., 1995. Cross-country evidence on the links between volatility and growth. American Economic Review, 85, 1138–1151.
Sorek, G., 2011. Patents and quality growth in OLG economy. Journal of Macroeconomics, 33, 690-699.
Spinesi, L., 2011. Probabilistic heterogeneous patent protection and innovation incentives. B.E. Journal of Economic Analysis & Policy, 11, Issue 1 (Contributions), Article 45.
Tang, S., 2002. The link between growth volatility and technical progress: Cross-country evidence. Economics Letters, 77, 335–341.
Tang, S., Groenewold, N., and Leung, C., 2008. The link between institutions, technical change and macroeconomic volatility. Journal of Macroeconomics, 30, 1520-1549.
Varsakelis, N., 2001. The impact of patent protection, economy openness and national culture on R&D investment: A cross-country empirical investigation. Research Policy, 30, 1059-1068.