Mind the knowledge gap! Exploring the causes of declining business dynamism in a macro agent-based model

The Institute of Economics will hold a seminar meeting as part of its Seminar Series on Tuesday, January 31, 2023: Roberta Terranova from the RFF CMCC European Institute on Economics and the Environment (Milan) will present the paper "Mind the knowledge gap! Exploring the causes of declining business dynamism in a macro agent-based model".

Abstract

The authors develop a macro agent-based model of an economy with technological progress, in which consumption-good firms have varying access to innovations based on their technological knowledge. The model is used to explain the stylized facts related to declining business dynamism documented in the literature, such as rising market concentration and markups, decreasing labor share, and productivity growth slowdown. In particular, the authors explore how the interplay between innovation, knowledge diffusion and market power affects the emergence of these long-term macroeconomic trends. The paper shows that technological polarization leads to higher concentration, but the effects on economic growth depend on the degree of knowledge diffusion in the economy.

The seminar will be held in blended mode. In person participation is possible in Aula 5 and available seats are allocated on a first come first served basis. For online participation please use the following link.