Coordination Frictions and Economic Growth

2017 Papers from Job Market Papers

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. This 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.

JEL-codes: O30 O31 O32 O33 O40 (search for similar items in EconPapers)
Date: 2017-10-26
New Economics Papers: this item is included in nep-gro
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Related works:
Journal Article: Coordination frictions and economic growth (2023)
Working Paper: Coordination Frictions and Economic Growth (2018)
Working Paper: Coordination Frictions and Economic Growth (2017)
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