Research
Spatial Allocation of Inventors, Knowledge Diffusion and Growth
Draft available soon.
Abstract
Where does innovation truly thrive? Inventive activity in the US is strikingly concentrated in a handful of hubs. This raises compelling questions: Does further agglomeration drive innovation, or could a more dispersed approach better leverage regional spillovers? To investigate, I exploit variation in patent citation lags across US states and develop a novel endogenous growth model with mobile inventors and workers. The model integrates an exogenous knowledge network that facilitates the dynamic exchange of ideas—laying the foundation for future inventions—between locations, revealing that inventors do not internalize how their location choice influences broader knowledge diffusion. These knowledge spillovers call for a targeted, place-based R&D subsidy to unlock latent innovation potential. Calibrating the model to data on inventor and worker allocations—and estimating the knowledge diffusion network from patent citations—I find that optimal policy would further concentrate inventors in established hubs, enhancing welfare by 1.8% in consumption-equivalent terms and boosting the economy’s long-run growth rate by 0.14 percentage points.
Engineering Ukraine’s Wirtschaftswunder
Abstract
As Ukraine emerges from the devastation of war, it faces a historic opportunity to engineer its own Wirtschaftswunder—a productivity-driven economic transformation akin to post-war West Germany. While investment-led growth may offer quick wins, it is efficiency, innovation, and institutional reform that will determine Ukraine’s long-term economic trajectory. Drawing on rich micro-level firm data spanning 25 years, this paper uncovers deep structural distortions that have suppressed creative destruction and productivity in Ukraine. It finds that business dynamism is on the decline, alongside rising market concentration among incumbent businesses, including low productivity state owned enterprises. To inform priorities for reviving business dynamism, this study develops a model of creative destruction drawing on Acemoglu et al. (2018) and Akcigit et al. (2021). The quantitative assessment highlights that policies that discipline entrenched incumbents are the bedrock for reviving business dynamism and engineer Ukraine’s Wirtschaftswunder. Policies targeting specific types of firms have limited efficacy when incumbents run wild.
Ready, Set, Unify: The Uneven Race between Trabants and BMWs
Abstract
Even 30 years after the reunification, regions in East Germany (the former GDR) live in considerably different economic conditions, with the average GDP per capita still about 20 percent below the average level in the West German regions. In this paper, we explore the factors that impeded faster convergence despite massive support to the East with a particular focus on technological differences and firm behavior. In the immediate aftermath of the reunification, production in the former GDR exhibited a rapid catch-up with the West with a pick-up in labor productivity. But the convergence tapered off quickly thereafter, with a stark difference between East and West German firms’ product qualities persisting ever since. We build a quantitative model of innovation, competition, and regional integration that can mimic these dynamics and provides a suitable setting to evaluate alternative policies that could have altered these dynamics. We show that large initial technological differences depressed Eastern firms’ incentives to compete and invest in technology improvements, perpetuating initial gaps. Delaying reunification, that is, opening up to competition from the West, would not help Eastern firms build up capacity. Sustained support for R&D in the East from the West could have helped shrink persistent gaps in product quality and income, although more effective alternatives appear to be subsidies to Western firms via either R&D support, with knowledge spillovers lifting also Eastern technology, or direct income support to facilitate technology transfer to the East via licensing.
High-Growth Firms and the Demand for Skills: Evidence from Job Postings
Measuring Productivity, Business Dynamism, and Economic Growth: The Case of Colombia and Turkiye