Working Paper: NBER ID: w17769
Authors: Leonid Kogan; Dimitris Papanikolaou; Amit Seru; Noah Stoffman
Abstract: We propose a new measure of the economic importance of each innovation. Our measure uses newly collected data on patents issued to US firms in the 1926 to 2010 period, combined with the stock market response to news about patents. Our patent- level estimates of private economic value are positively related to the scientific value of these patents, as measured by the number of citations that the patent receives in the future. Our new measure is associated with substantial growth, reallocation and creative destruction, consistent with the predictions of Schumpeterian growth models. Aggregating our measure suggests that technological innovation accounts for significant medium-run fluctuations in aggregate economic growth and TFP. Our measure contains additional information relative to citation-weighted patent counts; the relation between our measure and firm growth is considerably stronger. Importantly, the degree of creative destruction that is associated with our measure is higher than previous estimates, confirming that it is a useful proxy for the private valuation of patents.
Keywords: technological innovation; resource allocation; economic growth; patents
JEL Codes: E32; G14; O3; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| new measure of private economic value (D46) | scientific value of patents (O34) |
| increased innovation output (O36) | decline in growth for non-innovating firms (O39) |
| innovation (O35) | productivity increases (O49) |
| lagging behind in innovation (O39) | productivity declines (O49) |
| innovation index (O35) | output (C67) |
| innovation index (O35) | total factor productivity (TFP) (D24) |
| technological innovation (O35) | economic growth (O49) |
| technological innovation (O35) | creative destruction (O39) |
| firm's innovation output (O36) | firm growth (L26) |