Guido Cozzi

Culture as a Bubble

This paper considers an overlapping generations growth model in which “culture” is viewed as a public input in the production process of the labor efficiency units of future generations. Given the low appropriability of its beneficial effects, the market value of culture will be due to bubbles. I shall characterize the balanced growth paths associated with stationary rational bubbles on culture. Indeterminacy arises in the transition dynamics.

Inventing or Spying? Implications for Growth

An engineer graduates if shederives the obvious implications of her instructors hints. Butthe patent system rewards only the first to present nonobviousadvancements—ideas similarly skilled engineers are notexpected to invent. If a fraction of the newly invented hintsspill over before the technological advances they entail arecompleted and granted legal protection, the R&D workerswill find it convenient to spend some time searching for eachothers hints instead of creating their own. A simple modificationof the basic Schumpeterian model shows that the larger the skilledpopulation, the larger the relative incentive to spy.

R&D AND ECONOMIC GROWTH IN A CASH‐IN‐ADVANCE ECONOMY

R&D investment has well-known liquidity problems, with potentially important consequences. In this paper, we analyze the effects of monetary policy on economic growth and social welfare in a Schumpeterian model with cash-in-advance (CIA) constraints on consumption, R&D investment, and manufacturing. Our results are as follows. Under the CIA constraints on consumption and R&D (manufacturing), an increase in the nominal interest rate would decrease (increase) R&D and economic growth. So long as the effect of cash requirements in R&D is relatively more important than in manufacturing, the nominal interest rate would have an overall negative effect on R&D and economic growth as documented in recent empirical studies. We also analyze the optimality of Friedman rule and find that Friedman rule can be suboptimal due to a unique feature of the Schumpeterian model. Specifically, we find that the suboptimality or optimality of Friedman rule is closely related to a seemingly unrelated issue that is the overinvestment versus underinvestment of R&D in the market economy, and this result is robust to alternative versions of the Schumpeterian model.

Intellectual appropriability, product differentiation, and growth

In the modern world, the main assets are immaterial ideas. Such assets are much more easily stolen than traditional factors such as physical capital and land. In this paper, we investigate the long-run growth effects of intellectual misappropriation at the RD (2) in economies in which the RD (3) intellectual misappropriation neutralizes the positive growth effect of R&D subsidies but not their positive level effects.

Science-Based R&D in Schumpeterian Growth

Firm success is often associated with the development of better products. Private firms undertake applied R&D seeking market advantage, by capitalizing on the freely accessible results of basic research. But unpatentable basic research often fails to address applied R&D open problems. What is the role of the incentives in improving the innovative performance of an economy by matching partially motivated public researchers to their mission? Sometimes government-funded research projects are mission-directed, and yet in many cases the public sector academics indulge in carrier-driven research. An innovation system where, as in the United States, basic research is also driven by patents implicitly sets an ex-post incentive to the researchers guided by invisible hand. For a public innovation system – like the European one – designing an incentive scheme to motivate public researchers is of key importance for fostering the performance of the economic system. This paper extends the Schumpeterian multisector growth model with vertical innovation by highlighting a link between the degree of ‘targetness’ of public research and aggregate innovation. A positive effect of social capital is also proved.

Information Transmission and the Bounds to Growth

Abstract This paper studies the long run growth implications of the presence of information acquisition and transmission costs. We assume that vertical innovation requires researchers to be informed on the current version of the product they want to improve upon; and we also assume that quasi-fixed managerial inputs are required for production in the manufacturing sector. Despite the fact the increases in total factor productivity cause R&D and managerial quasi-fixed labor costs to decrease in the same way as variable labor costs, the presence of these costs is sufficient to rule out the strong scale effect at all levels of the intertemporal returns to ideas. More importantly, the upper bound of long run growth rates crucially depends on information transmission costs.

Exploring Growth Trajectories

In this article we try an exploration, by means of afew simple exercises, of the consequences of introducing intoa standard endogenous-growth model with expanding product varietythe possibility that the invention process of the new blueprintsmay follow more than one single predetermined trajectory. Themain motivations are a slightly more realistic formalizationof entrepreneurial creativity with spillovers and the greaterflexibility of the economic results.

Globalization and Wage Polarization

In the 1980s and 1990s, the U.S. labor market experienced a remarkable polarization along with fast technological catch-up as Europe and Japan improved their global innovation performance. Is foreign technological convergence an important source of wage polarization? To answer this question, we build a multicountry Schumpeterian growth model with heterogeneous workers, endogenous skill formation, and occupational choice. We show that convergence produces polarization through business stealing and increasing competition in global innovation races. Quantitative analysis shows that these channels can be important sources of U.S. polarization. Moreover, the model delivers predictions on the U.S. wealth-income ratio consistent with empirical evidence.

Does it Pay to Work for Free? Negative Selection and the Wage Returns to Volunteer Experience

This paper offers the first instrumental variables estimates of the wage returns to volunteer experience. The returns are substantial and differ considerably by gender. The results imply that the unequal valuation of volunteer experience by gender is more important in explaining the gender earnings gap than is the unequal valuation of part-time paid work experience. The results also indicate negative selection into unpaid work. In a simple model of optimal volunteering, negative selection implies that a lower cost of volunteering would produce both an expanded and higher-skilled pool of volunteers, and greater societal benefits from volunteer work.

R&D cooperation, innovation, and growth.

This paper presents a standard endogenous growth framework in which the source of growth is represented by vertical innovations. The crucial assumption we introduce is that there is a positive information gap concerning the discovery of innovation. The aim of reducing the information-dissemination lag provides incentives for firms to decide to merge their research efforts. Also, we find that the skilled--unskilled wage gap is strongly related to this phenomenon. We prove that changing antitrust attitudes toward efficiency-motivated mergers in contestable industries may simultaneously explain observed changes in the industry structure, qualitative innovation, wage inequality, and labor-supply composition.