Harrodian instability in decentralized economies: an agent-based approach (20/2017)

This paper presents a small-scale agent-based extension of the so-called neo-Kaleckian model. The aim is to investigate the emergence of Harrodian instability in decentralized market economies. We introduce a parsimonious microfoundation of investment decisions. Agents have heterogeneous expectations about demand growth and set idiosyncratically their investment expenditures. Interactions occur through demand externalities.

Spatio-Temporal Patterns of the International Merger and Acquisition Network (19/2017)

This paper analyzes the world web of mergers and acquisitions (M&As) using a complex network approach. We use data of M&As to build a temporal sequence of binary and weighted-directed networks for the period 1995-2010 and 224 countries (nodes) connected according to their M&As flows (links). We study different geographical and temporal aspects of the international M&As network (IMAN) […]

International Sourcing and Employment in Times of Financial Crisis: The case of France (18/2017)

This paper studies the transmission of global shocks during the Great Recession and its impact on French employment. Particularly, we explore the role of trade credit in the propagation of cross-border shocks. Using a sub-sample of importing enterprises that were active over 2004-2009, our findings imply that strong pre-crisis sourcing ties with countries […]

Innovation vs Financialization: an Analysis on the United States as a Source of Innovation for European Big Pharma (17/2017)

Driven by the perspective of maximizing shareholder value (MSV), the U.S. biopharmaceutical industry has adopted a highly financialized business model. In such a model, the key metrics are stock-price performance, earnings per share, and dividend yield, supported by distributions to shareholders in the forms of dividends and stock buybacks. Such value extraction is incentivized by stock-based executive pay and can be pursued at the expense of productivity in drug innovation (Lazonick et al. 2017) […]

Share Repurchases in Europe. A Value Extraction Analysis (16/2017)

Encompassed by maximization of shareholder value ideology, large US corporations raised corporate distributions to record high levels, particularly by share repurchases which provide short-term boosts to their stock prices. Since the early 1980s, the deregulation of the US economy and the financialization wave provided incentives for companies to direct financial resources towards shareholder value instead of innovation and job creation.[…]

The Value-Extracting CEO: How Executive Stock-Based Pay Undermines Investment in Productive Capabilities (15/2017)

The business corporation is the central economic institution in a modern economy. A company’s senior executives, with the advice and support of the board of directors, are responsible for the allocation of corporate resources to investments in productive capabilities. Senior executives also advise the board on the extent to which, given the need to invest in productive capabilities, the company can afford to make cash distributions to shareholders. Motivating corporate resource-allocation decisions[…]

The Functions of the Stock Market and the Fallacies of Shareholder Value (14/2017)

Conventional wisdom has it that the primary function of the stock market is to raise cash for companies for the purpose of investing in productive capabilities. The conventional wisdom is wrong. Academic research on sources of corporate finance shows that, compared with other sources of funds, stock markets in advanced countries have been insignificant suppliers of capital for corporations. The purpose of this essay is to build a rigorous and relevant conception of the evolving role of the stock market in the U.S. corporate economy […]

US Pharma’s Business Model: Why It Is Broken, and How It Can Be Fixed (13/2017)

Price gouging in the US pharmaceutical drug industry goes back more than three decades. In 1985 US Representative Henry Waxman, chair of the House Subcommittee on Health and the Environment, accused the pharmaceutical industry of “gouging the American public” with “outrageous” price increases, driven by “greed on a massive scale.” Despite many Congressional inquiries since the 1980s, including the case of Gilead Sciences’ extortionate pricing of the Hepatitis-C drug Sovaldi since 2014, […]

Comment on the SEC Pay Ratio Disclosure Rule (12/2017)

In this comment, we explain our objections to the SEC’s current formulation of the Pay Ratio Disclosure Rule on each of three grounds: 1) the erroneous estimation of CEO pay; 2) the unclear specification of the “median” worker; and 3) the risk of normalizing a pay ratio that is far too high. Then we present the latest data on the remuneration of the 500 highest-paid CEOs in the United States, demonstrating the way in which the SEC’s measure of CEO pay that enters into the CEO-to-median-worker pay ratio tends to systematically underestimate actual executive pay.[…]

How do financial markets adapt? An institutional comparison between European and Japanese Junior stock markets (11/2017)

Since the last decade, new Junior stock markets or second-tier stock markets have emerged in various countries, often influenced by the Alternative Investment Market, created by the London Stock Echange in 1995, and considered by numerous economic and political actors as a reference. Junior Markets are characterised by simplified listing processes and customised information standards. The creation of junior stock market segments can be seen as an instance of financialisation […]

Firm Growth and Stock Market Regulation in Different Financial Systems (10/2017)

This article aims at testing whether firm growth processes differ across countries characterized by different financial systems and varieties of capitalism, as well as across stock market segments with different listing requirements and information standards. We estimate Gibrat regressions of firm growth through dynamic panel methods on datasets of manufacturing firms listed on the stock exchanges in two polar types of capitalism, namely Japan and the United Kingdom, along with statistics on Germany, France, and Sweden. […]

The Dynamics of Innovation in the Wireless Telecom Industry during two Eras of Technological Convergence, 1995-2015 (9/2017)

This paper traces the changing dynamics and strategies of innovation in wireless infrastructure industry, covering three major phases: (1) massive adaptation of wireless services in the 1990s and the Internet Cries, (2) the smartphone revolution and the trends to commoditization of wireless systems and (3) search for new profitable growth in services, cloud and Internet-of-Things. It analyses the development of the specific industry character: role of open industry standards as pathways for innovation, […]

Innovation, competition and financialization in the communications technology industry: 1996-2016 (8/2017)

The objective of this paper is to document the relative position of different firms in the communications technology industry to take advantage of new opportunities and the potential influence of financialization on their innovative strategy and performance. To do so, we compare the performance of the leading sixteen firms in the industry over the past twenty years and provide summaries of the impacts of stock buybacks——as the most evident manifestations of financialization— on major firms in the global industry over the past two decades.[…]

Executive compensation in Europe: Realized gains from stock-based pay (7/2017)

This paper adds to the empirical evidence on the extent to which the European executives are incentivized and rewarded by stock-based pay. It shows that stock-based compensation of CEOs in European listed firms is usually underestimated and it documents the heterogeneity among countries. We base our work on a sample of 227 large, publicly-traded companies listed in the S&P Europe 350 index from five major European countries: France, Germany, Italy, Sweden and United Kingdom.[…]


Offshoring, industry heterogeneity and employment (6/2017)

Economies and production systems are subject to incessant processes of structural change fuelled by the dynamics of demand, technology and international competition. The increasing international fragmentation of production, also known as “offshoring”, is an important element of such a (global in scale) process of structural change having important implications for employment and on the way employment gain and losses are distributed across firms, industries, national economies and components of the labour force.[…]


Agent-Based Model Calibration using Machine Learning Surrogates (5/2017)

Taking agent-based models (ABM) closer to the data is an open challenge. This paper explicitly tackles parameter space exploration and calibration of ABMs combining supervised machine-learning and intelligent sampling to build a surrogate meta-model. The proposed approach provides a fast and accurate approximation of model behaviour, dramatically reducing computation time. In that, our machine-learning surrogate facilitates large scale explorations of the parameter-space, […]


Persistent High-Growth Firms in China’s Manufacturing (04/2017)

This article investigates the characteristics of high-growth (HG) firms in Chinese manufacturing, and further explores the effects of firm characteristics on persistence of high-growth. We employ a multidimensional definition of HG firms that simultaneously accounts for growth of sales and employment. Exploiting a representative panel covering the period of the China’s miracle, we find that HG firms outperform other firms, showing higher productivity, […]


The formalization of organizational capabilities and learning: results and challenges (3B/2017)

This work offers an overview of recent formalizations of organizational capabilities and learning. We first present the main characteristics both of NK models and of the approach based on Classifier Systems, focusing on their early applications to organization studies. We then discuss how the use of these models has contributed, […]
We examine market selection mechanisms and their strength for a representative cohort of US new independent firms. In particular, we explore whether and how effectively markets reward newly-born firms according to their ‘fitness’ in terms of both labour productivity and profitability. 

Causes and Consequences of Hysteresis: Aggregate Demand, Productivity and Employment (03/2017)

In this work we develop an agent-based model where hysteresis in major macroeconomic variables (e.g. GDP, productivity, unemployment) emerges out of the decentralized interactions of heterogeneous firms and workers. Building upon the model in Dosi et al. (2016, 2017), we specify an endogenous process of accumulation of workers’ skills and a state-dependent process of entry, studying their hysteretic impacts. Indeed, hysteresis is ubiquitous.[…]


Inequality, Redistributive Policies and Multiplier Dynamics in an Agent-Based Model with Credit Rationing (02/2017)

We build an agent-based model populated by households with heterogeneous and time-varying financial conditions in order to study how different inequality shocks affect income dynamics and the effects of different types of fiscal policy responses. We show that inequality shocks generate persistent falls in aggregate income by increasing the fraction of credit-constrained households and by lowering aggregate consumption.[…] 


The Janus-Faced Nature of Debt: Results from a Data-Driven Cointegrated SVAR Approach (01/2017)

In this paper, we investigate the causal effects of public and private debts on U.S. output dynamics. We estimate a battery of Cointegrated Structural Vector Autoregressive models, and we identify structural shocks by employing Independent Component Analysis, a data-driven technique which avoids ad-hoc identification choices. The econometric results suggest that the impact of debt on economic activity is Janus-faced.[…]


In this work we shall attempt an excursus across fundamentally different streams of modern interpretations of the “ primitive entities” constituting the social fabrics of economic systems. Behind each specific interpretative story, there is a set of ceteris paribus assumptions and also some fictitious tale on a ‘once upon a time’ reconstruction of the theoretical primitives of the story itself.[…] 


In Order to Stand up You Must Keep Cycling: Change and Coordination in Complex Evolving Economies (34/2016)

In this work we discuss the main building blocks, achievements and challenges of an evolutionary interpretation of the relation between mechanisms of coordination and drivers of change in modern economies, seen as complex evolving systems. It is an evident stylised fact of modern economic systems that there are forces at work which keep them together and make them grow despite rapid and profound modifications of their industrial structures, social relations, techniques of production, patterns of consumption […]


Technological Innovation and the Distribution of Employment Growth: a firm-level analysis (33B/2016)

This work studies the firm-level relationship between different types of innovative activities and employment growth rates. Improving on previous investigations on the topic, it combines a dynamic panel analysis of the effects of different types of product and process innovation on employment growth with an outlook on the whole conditional employment growth distribution.[…]



Gazelles and muppets in the City: Stock market listing, risk sharing, and firm growth quantiles (33A/2016)

Financialization is persuading academics and policy-makers that the growth of SMEs can be unleashed by promoting their quotation on stock markets. Is that true? Answering this can give clues on the functions that stock markets actually perform in the financialized world. The market may allow collecting finance for productive investments, or mainly provide firms with opportunities for value extraction.[…]


How Can Europe Change? (33/2016)

Civil Society Proposals for Policy Alternatives on Socially Inclusive and Sustainable Growth.
The challenge to develop a growth model for Europe that is innovation-fuelled, sustainable and inclusive is at the core of the activities of the ISIGrowth project. This Report addresses the way Europe’s civil society has viewed and addressed such challenge, contributing to Europe’s policy debate. It offers the most comprehensive […] 


Fiscal Transfers and Regional Economic Growth (32/2016)

In the aftermath of the financial crisis, with periphery countries in the European Union even more falling behind the core countries economically, there have been quests for various kind of fiscal policies in order to revert divergence. How these policies would unfold  and perform comparatively is largely unknown. We analyze four such stylized policies in an agent-based macroeconomic model […]


The Creation Function of a Junior Listing Venue: An Empirical Test on the Alternative Investment Market (31/2016)

Stock markets perform a creation function if the inflow of financial capital in the birth of new privately-held firms is stimulated by the promise of stock market liquidity at a later point in time. Junior stock market segments, characterized by lighter listing procedures and costs, may be suited to perform a creation function, but their liquidity promise may not be reliable due information opacity.[…]


Persistence of Innovation and Patterns of Firm Growth (30/2016)

In this work we test if persistent innovators, defined according to different innovation activities (R&D, product and process innovation, patenting) grow more than other firms, and if innovation persistence can contribute to explain the so far little evidence in favor of persistence in growth itself. We exploit a somewhat uniquely long-in-time dataset tracing a representative sample of Spanish […]


Financial Cycles and the Macroeconomic Dynamics of Developing Economies (29/2016)

This paper discusses the impact of financial cycles on the macroeconomic dynamics of developing economies. The main argument is that these cycles have a strong impact on key macroeconomic prices―in particular the real exchange rate―heightening external disequilibrium. The combination of an appreciated currency with subsequent external crises compromises investment, […]


Measures, Drivers and Effects of Green Employment: Evidence from US Local Labor Markets, 2006-2014 (28/2016)

This paper explores the nature and the key empirical regularities of green employment in US local labor markets between 2006 and 2014. We construct a new measure of green employment based on the task content of occupations. Descriptive analysis reveals the following: 1. the share of green employment oscillates between 2 and 3 percent, and its trend is strongly pro-cyclical; […]

An Empirical Analysis of Sectoral Employment Shifts and the Role of R&D (27/2016)

This document contributes to Task 1.4 of the ISIGrowth project by collecting empirical evidence with respect to shifts in employment between manufacturing and service sectors and the role of R&D investments as well as productivity dynamics in this process.In particular, relying on World Bank as well as on OECD STAN sectoral-level data for European countries the following questions are addressed […]


Financing Renewable Energy: Who is Financing What and Why It Matters (26/2016)

Accelerating innovation in renewable energy (RE) requires not just more finance, but finance servicing the entire innovation landscape. Given that finance is not ‘neutral’, more information is required on the quality of finance that meets technology and innovation stage-specific financing needs for the commercialization of RE technologies.[…]


Complexity and the Economics of Climate Change: a Survey and a Look Forward (25/2016)

We provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events,[…]


Preventing Environmental Disasters: Market-Based vs. Command-and-Control Policies (24/2016)

The paper compares the effects of market-based and command-and-control climate policies on the direction of technical change and the prevention of environmental disasters. Drawing on the model proposed in Acemoglu et al. (2012), we show that market-based policies (carbon taxes and subsidies towards clean sectors) exhibit bounded window of opportunities […]


The Effects of Labour Market Reforms upon Unemployment and Income Inequalities: an Agent Based Model (23/2016)

This paper is meant to analyse the effects of labour market structural reforms by means of an agent-based model. Building on Dosi et al. (2016b) we introduce a policy regime change characterized by a set of structural reforms on the labour market, keeping constant the structure of the capital- and consumption-good markets.[…]


Financial Regimes, Financialization Patterns and Industrial Performances: Preliminary Remarks (22/2016)

The evolutionary taxonomy of financial systems, outlined by Dosi (1990), argued that market-based systems would be comparatively more engaged in the exploration of new technological paradigms, as an outcome of market selective pressure, whereas the more institutionalized finance allocation in credit-based systems would give them an advantage in cumulative learning.[…]


Characterizing the Policy Mix and Its Impact on Eco-Innovation in Energy-Efficient Technologies (21/2016)

This paper provides an empirical investigation of the role played by selected characteristics of the policy mix in inducing innovation in energy efficiency technologies. An original dataset covering 23 OECD countries over the period 1990-2010 combines the full set of policies in the energy efficiency domain for the residential sector with data on patents applied over the same period in this specific technological sector.[…]


No Man Is an Island: The Impact of Heterogeneity and Local Interactions on Macroeconomic Dynamics (20/2016)

We develop an agent-based model in which heterogeneous firms and households interact in labor and good markets according to centralized or decentralized search and matching protocols. As the model has a deterministic backbone and a full-employment equilibrium, it can be directly compared to Dynamic Stochastic General Equilibrium (DSGE) models. We study the effects of negative productivity shocks by way of impulse-response func- tions (IRF).[…]


Macroeconomic Regimes, Technological Shocks and Employment Dynamics (19/2016)

In this work, we investigate the interrelations among technology, output and employ- ment in the different states of the U.S. economy (recessions vs. expansions). More precisely, we estimate different threshold vector autoregression (TVAR) models with TFP, hours, and GDP, employing the latter as threshold variable, and we assess the ensuing generalized impulse responses of GDP and hours as to TFP shocks.[…]


Innovation and Within-firm Wage Inequalities: Empirical Evidence from Major European Countries (18/2016)

A large literature analyses the links between wage inequality and technology, without explicitly taking into account within-firm wage dispersion. In this work we seek to fill this gap, exploiting a matched employer-employee dataset from a large representative survey on firms active in major European economies, providing several contributions. […]


Innovative Enterprise or Sweatshop Economics? In Search of Foundations of Economic Analysis (17/2016)

In Capitalism, Socialism, and Democracy, Joseph Schumpeter asserts: “perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal efficiency.” For neoclassical economists, the large corporation is a “market imperfection” that, compared with “perfect competition,” should result in higher product prices and lower industry output. […]


The “Schumpeterian” and the “Keynesian” Stiglitz: Learning, Coordination Hurdles and Growth Trajectories (16/2016)

This work, which shall contribute to the Fest “A Just Society: Honouring Joseph Stiglitz”, discusses a major unifying theme in Joe Stiglitz monumental work, namely, the analysis of economies characterised by persistent learning and coordination hurdles. In his analysis Joe is in many respects a “closet evolutionist” who in fact highlighted and explored many evolutionary […]

A Heterogeneous Agent Macroeconomic Model for Policy Evaluation: Improving Transparency and Reproducibility (15/2016)

This paper provides a detailed description of the Eurace@Unibi model, which has been developed as a versatile tool for economic policy analysis. The model explicitly incorporates the decentralized interaction of heterogeneous agents across different sectors and regions. The modeling of individual behavior is based on heuristics with empirical microfoundations. Although Eurace@Unibi has been applied successfully […]

Eco-Innovation, Sustainable Supply Chains and Environmental Performance in European Industries (14/2016)

The introduction and adoption of green technologies are considered the most cost effective way to reduce environmental pressure without compromising economic competitiveness. The scientific literature has emphasized the crucial role played by diffusion pathways of green technologies along the supply value chain, but empirical quantitative findings on the effectiveness of green technologies in improving environmental […]


A Method for Agent-Based Models Validation (13/2016)

This paper proposes a new method for empirically validate simulation models that gen- erate artificial time series data comparable with real-world data. The approach is based on comparing structures of vector autoregression models which are estimated from both artificial and real-world data by means of causal search algorithms. This relatively simple procedure is able to […]


Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead (12/2016)

The Great Recession seems to be a natural experiment for economic analysis, in that it has shown the inadequacy of the predominant theoretical framework — the New Neoclassical Synthesis (NNS) — grounded on the DSGE model. In this paper, we present a critical discussion of the theoretical, empirical and political-economy pitfalls of the DSGE-based approach […]


The Complex Interactions between Economic Growth and Market Concentration in a Model of Structural Change (11/2016)

We study the relation between variety, market concentration, and economic growth, along different phases of economic development which entail a number of changes to the structure of production and consumption in the economy. We focus on three aspects of structural change, which are connected and are correlated to variety, market concentration, and economic growth: (i) […]


What Do Firms Know? A New Look at the Relationship between Patenting Profiles and Patterns of Product Diversification (10/2016)

In this work we analyze the relationship between the patterns of firm diversifica- tion, if any, across product lines and across bodies of innovative knowledge, proxied by the patent classes where the firm is present. Putting it more emphatically we investigate the relationship between “what a firm does” and “what a firm knows”. Using a […]


The Innovation-Employment Nexus: a Critical Survey of Theory and Empirics (9/2016)

Understanding whether technical change is beneficial or detrimental for employment is at the center of the policy debate, especially in phases of economic recession. So far, the effects of innovation – in its manifold declinations and intrinsic complexity – on labour demand have proven to be not unequivocal. This essay critically reviews the role of […]

The Rise and Fall of R&D Networks (8/2016)

Drawing on a large database of publicly announced R&D alliances, we empirically investigate the evolution of R&D networks and the process of alliance formation in several manufacturing sectors over a 24-year period (1986-2009). Our goal is to empirically evaluate the temporal and sectoral robustness of a large set of network indicators, thus providing a more […]


The Dynamics of Skills: Technology and Business Cycles (7/2016)

Building on studies on the impact of the Great Recession on the skill structure of employment (Card and Mas, 2016), this article investigates developments over the last business cycle (2002-2007 and 2007-2011) in 38 manufacturing and service industries of five major European countries (Germany, France, Spain, Italy and United Kingdom). We analyze how technology, education […]


Small, Young, and Exporters: New Evidence on the Determinants of Firm Growth (6/2016)

This work investigates how the export status of the firm influences the patterns of growth at different age classes. We address this research question resorting to a novel set of data that links together the universe of Italian firms and detailed data on export transactions. We find that the positive relationship between ex-port status and […]


When more Flexibility Yields more Fragility: the Microfoundations of Keynesian Aggregate Unemployment (5/2016)

Wages are an element of cost crucially affecting the competitiveness of individual firms. But the wage bill is also a crucial element of aggregate demand. Hence it could be that more “flexible” and fluid labour markets, while allowing for faster inter-firm reallocation of labour, may also render the whole economic system more fragile, more prone […]


The Dynamics of Profits and Wages: Technology, Offshoring and Demand (4/2016)

This article explores the impact of innovation, offshoring and demand on profits and wage dynamics. The growing relevance of functional distribution in terms of explaining personal distribution underscores the importance of our results for understanding recent increases in inequality. The empirical analysis performed herein involves a panel of 38 manufacturing and service sectors over four […]

Innovation Strategies and Firm Growth (3A/2016)

In this work, we explore the relations between sales growth and a set of innovation indicators that capture the different sources, modes and results of the innovative activity undertaken within firms. We exploit a rich panel on innovation activity of Spanish manufacturing firms, reporting detailed CIS-type information continuously over the period 2004-2011.[…]


Modelling the Virtuous Circle of Innovation. A Test on Italian Firms (3/2016)

The ‘virtuous circle’ between innovative inputs, outputs and economic performance is investigated in this article with a three-equation model highlighting feedback loops and simultaneous relations. An empirical test is carried out considering innovative expenditure, innovative turnover and economic results in a sample of Italian manufacturing firms, comparing occasional and serial innovators. We use data for […] 


Industrial Policy and Technology in Italy (2/2016)

After the crisis started in 2008 Italy’s industry has lost close to one quarter of its industrial production. The possibility for the country to reconstruct its production capacity largely depends on whether a new industrial policy is developed. The article documents the decline of Italy’s industry and technology and the impact of the crisis. The […]


When Linder meets Hirschman: Inter-industry linkages and global value chains in business services (1/2016)

The scholarship on Global Value Chains (GVCs) is recently focusing on the international fragmentation of production that involves services and in particular business services (BS). It has been argued that participation in business services GVCs might open up new opportunities for catching up in developing countries. What are the theoretical and empirical bases for such […]


Taming Macroeconomic Instability: Monetary and Macro Prudential Policy Interactions in an Agent-Based Model (6/2015)

This paper develops an agent-based model to study the macroeconomic impact of alternative macro prudential regulations and their possible interactions with different monetary policy rules. The aim is to shed light on the most appropriate policy mix to achieve the resilience of the banking sector and foster macroeconomic stability. Simulation results show that a triple- […]


Labour Market Reforms in Italy: Evaluating the Effects of the Jobs Act (5/2015)

As a response to the 2008 crisis, most Southern European countries introduced labour market reforms with the aim to increase flexibility and competitiveness, in line with EU requirements. In Italy, Law 183 of 2014, evocatively named the ‘Jobs Act’, has introduced a deep change in industrial relations and labour market dynamics. Bringing to completion a […]


The Limits to Credit Growth: 
Mitigation Policies and Macroprudential Regulations to Foster Macrofinancial Stability and Sustainable Debt (4/2015)

We study an economy with a high degree of financialization in which (non-financial) firms need loans from commercial banks to finance production, service debt, and make long-term investments. Along the business cycle, the economy follows Minskyan dynamics with firms traversing various stages of financial fragility, i.e. hedge, speculative and Ponzi finance (cf., Minsky, 1978, 1986). […] 


Bubbles, Crashes and the Financial Cycle: Insights from a Stock-Flow Consistent Agent-Based Macroeconomic Model (3/2015)

This paper explores how different credit market- and banking regulations affect business fluctuations. Capital adequacy- and reserve requirements are analysed for their effect on the risk of severe downturns. We develop an agent-based macroeconomic model in which financial contagion is transmitted through balance sheets in an endogenous firm-bank network, that incorporates firm bankruptcy and heterogeneity […]

From Market Fixing to Market-Creating: a New Framework for Economic Policy (2/2015)

Many countries are pursuing innovation-led ‘smart’ growth, which requires certain types of long-run strategic investments. This paper argues that such investments require public policies that aim to create markets, rather than just ‘fixing’ market failures (or system failures). Such ‘mission-oriented’ investments have led to men walking on the moon (which created spillovers across the economy) […] 


The Rise of Mission-Oriented State Investment Banks: the Cases of Germany’s KfW and Brazil’s BNDES (1/2015)

This paper focuses on the rise of state investment banks (SIBs) as lead funders of mission-oriented innovation in various countries’ agendas regarding smart (innovation-led) growth, and not just fixers of ‘market failures’. The market failure justification for public finance fails to capture the active mission-oriented role that such banks are playing in shaping and creating […]