Munich Personal RePEc Archive

Coordination Frictions and Economic Growth

Gabrovski, Miroslav (2017): Coordination Frictions and Economic Growth.

This is the latest version of this item.

[img]
Preview
PDF
MPRA_paper_82096.pdf

Download (1MB) | Preview

Abstract

In practice, firms face a mass of scarce innovation projects. They choose a particular research avenue towards which to direct their effort, but do not coordinate these choices. This gives rise to coordination frictions. Our paper develops an expanding-variety endogenous growth model to study the impact of these frictions on the economy. The coordination failure generates a mass of foregone innovation and reduces the economy-wide research intensity. Both of these effects decrease the growth rate. Because of this, the frictions also amplify the fraction of wasteful simultaneous innovation. A numerical exercise suggests that the impact of coordination frictions on both the growth rate and welfare is substantial.

Available Versions of this Item

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.