Endogenous technology adoption and R & D as sources of business cycle persistence

Diego Anzoategui, Diego Comin, Mark Gertler, Joseba Martinez

    Research output: Contribution to journalArticle

    Abstract

    We examine the hypothesis that the slowdown in productivity following the Great Recession was in significant part an endogenous response to the contraction in demand that induced the downturn. We motivate, develop, and estimate a model with an endogenous TFP mechanism that allows for costly development and adoption of technologies. Our main finding is that a significant fraction of the post- Great Recession fall in productivity was an endogenous phenomenon, suggesting that demand factors played an important role in the postcrisis slowdown of capacity growth. More generally, we provide insight into why recoveries from financial crises may be so slow.

    Original languageEnglish (US)
    Pages (from-to)67-110
    Number of pages44
    JournalAmerican Economic Journal: Macroeconomics
    Volume11
    Issue number3
    DOIs
    StatePublished - Jul 1 2019

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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