Featured paper · 2018
Innovation, Reallocation and Growth
The canonical structural model of an economy where heterogeneous firms innovate, enter, exit, and reallocate. Used as the workhorse for evaluating R&D subsidies, entry subsidies, and incumbent taxation across a range of policy counterfactuals.
Daron Acemoglu, Ufuk Akcigit, Harun Alp, Nicholas Bloom, William Kerr. American Economic Review, 2018.
The policy line
Subsidizing R&D for incumbents helps the wrong firms. Entry subsidies and the credible threat of exit do more for aggregate growth.
Summary
The canonical structural model of an economy where heterogeneous firms innovate, enter, exit, and reallocate. Used as the workhorse for evaluating R&D subsidies, entry subsidies, and incumbent taxation across a range of policy counterfactuals.
The Academy uses this paper as a primary text across its five pillars. The full text is available at the publisher.
