Institutional quality, green innovation and energy efficiency

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr411.pdf

Investment shocks and the relative price of investment

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents’ information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. ( JEL D83, D84, E13, E32, O33)

/pdf/news-driven-business-cycles-insights-and-challenges-34i54znwnz.pdf

News Driven Business Cycles: Insights and Challenges

Understanding the role of international trade in explaining vast differences in productivity across countries remains a key question in inter national economics Recent literature empha sizes the microfoundations underlying this relationship One strand of literature highlights how new export opportunities and toughness of competition generate aggregate productiv ity gains by reallocating resources from less to more productive firms (Marc J Melitz 2003; Melitz and Gianmarco Ottaviano 2008) Trade also increases aggregate productivity through improvements in firm productivity (Pavcnik 2002), which have recently been linked to the reallocation of resources across products within firms (Andrew B Bernard, Stephan J Redding, and Peter K Schott 2006) and use of imported inputs (Mary Amiti and Jozef Konings 2007) The latter relate to the idea that trade provides domestic firms access to cheaper and previously unavailable inputs The idea that international trade benefits

/pdf/trade-liberalization-and-new-imported-inputs-4kikrmmk8w.pdf

Trade Liberalization and New Imported Inputs

We examine conventional approaches to evaluating the economic impact of protectionist trade policies. We illustrate these conventional approaches by applying them to the tariffs introduced by the Trump administration during 2018. In the wake of this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018. We see similar patterns for foreign countries that have retaliated with their own tariffs against the United States, which suggests that the trade war has also reduced the real income of these other countries.

https://pubs.aeaweb.org/doi/pdf/10.1257/jep.33.4.187

The Impact of the 2018 Tariffs on Prices and Welfare

I develop a multicountry-model in which economic growth is driven mainly by domestic innovation and the adoption of foreign technologies embodied in traded intermediate goods. Fitting the model to data on innovation, output per capita, and trade in varieties for the period 1996-2007, I estimate the costs of both domestic innovation and adopting foreign innovations, and then decompose the sources of economic growth around the world. I find that the adoption channel has been especially important in developing countries, and accounts for about 65% of their “embodied” growth. Developed countries grow mainly through the domestic innovation channel, which explains 85% of their “embodied” growth. A counterfactual exercise shows that if all countries reached the same research productivity, then (i) the world’s steady-state growth rate would double, and (ii) developing countries would close the gap in terms of both growth rate and income per capita.

Innovation, Diffusion, and Trade: Theory and Measurement

https://flora.insead.edu/fichiersti_wp/inseadwp2010/2010-46.pdf

We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle. The framework shares the emphasis of the recent "new shock" literature on revisions of beliefs about the future as a source of fluctuations, but differs by tieing these beliefs to fundamentals of the evolution of the technology frontier. An important feature of the model is that the process of moving to the frontier involves costly technology adoption. In this way, news of improved growth potential has a positive effect on current hours. As we show, the model also has reasonable implications for stock prices. We estimate our model for data post-1984 and show that the innovations shock accounts for nearly a third of the variation in output at business cycle frequencies. The estimated model also accounts reasonably well for the large gyration in stock prices over this period. Finally, the endogenous adoption mechanism plays a significant role in amplifying other shocks.

Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations

We compute welfare gains from trade in a dynamic, multicountry model with capital accumulation. We examine transition paths for 93 countries following a permanent, uniform, unanticipated trade liberalization. Both the relative price of investment and the investment rate respond to changes in trade frictions. Relative to a static model, the dynamic welfare gains in a model with balanced trade are three times as large. The gains including transition are 60 percent of those computed by comparing only steady states. Trade imbalances have negligible effects on the cross-country distribution of dynamic gains. However, relative to the balanced-trade model, small, less-developed countries accrue the gains faster in a model with trade imbalances by running trade deficits in the short run but have lower consumption in the long-run. In both models, most of the dynamic gains are driven by capital accumulation.

/pdf/capital-accumulation-and-dynamic-gains-from-trade-5gmrl1rt0q.pdf

Capital Accumulation and Dynamic Gains from Trade

/pdf/innovation-diffusion-and-trade-theory-and-measurement-2var98g0fx.pdf

Ana Maria Santacreu

Papers

Innovation, Diffusion, and Trade: Theory and Measurement

Innovation, Diffusion, and Trade: Theory and Measurement

Technology Innovation and Diffusion as Sources of Output and Asset Price Fluctuations

Capital Accumulation and Dynamic Gains from Trade

Innovation, Diffusion, and Trade: Theory and Measurement