Working Paper: CEPR ID: DP6075
Authors: Yann Bramoull; Gilles Saint-Paul
Abstract: This paper studies the dynamics of fundamental research. We develop a simple model where researchers allocate their effort between improving existing fields and inventing new ones. A key assumption is that scientists derive utility from recognition from other scientists. We show that the economy can be either in a regime where new fields are constantly invented, and then converges to a steady state, or in a cyclical regime where periods of innovation alternate with periods of exploitation. We characterize the cyclical dynamics of the economy, show that indeterminacy may appear, and establish some comparative statics and welfare implications.
Keywords: indeterminacy; innovation cycles; research dynamics
JEL Codes: C61; O39
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| citation premium (Y60) | equilibrium rate of innovation (O39) |
| mean-preserving spread in the distribution of new field values (C46) | equilibrium rate of innovation (O39) |
| citation premium alleviates risk aversion among researchers (D81) | increased innovation (O35) |