Found 41 article(s) for author 'Philippe Aghion'

Monetary Policy, Product Market Competition, and Growth

Monetary Policy, Product Market Competition, and Growth. Philippe Aghion, November 13, 2018, Paper, “In this paper we argue that monetary easing fosters growth more in more credit-constrained environ ments, and the more so the higher the degree of product market competition. Indeed when competition is low, large rents allow firms to stay on the market and reinvest optimally, no matter how funding conditions change with aggregate conditions. To test this prediction, we use industry-level and firm-level data from the Euro Area to look at the effects on sectoral growth and firm-level growth of the unexpected drop in long-term government bond yields following the announcement of the Outright Monetary Transactions program (OMT) by the ECB. We find that the monetary policy easing induced by OMT, contributed to raising sectoral (firm-level) growth more in more highly leveraged sectors (firms), and the more so the higher the degree of product market competition in the country (sector).Link

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Missing Growth from Creative Destruction

Missing Growth from Creative Destruction. Philippe Aghion, November 2017, Paper, “Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Using U.S. Census data, we apply two ways of assessing the magnitude of “missing growth” for private nonfarm businesses from 1983–2013. The first approach exploits information on the markets hare of surviving plants. The second approach applies in direct inference to firm-level data. We find: (i) missing growth from imputation is substantial — at least 0.6 percentage points per year; and (ii) most of the missing growth is due to creative destruction (as opposed to new varieties).Link

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Entrepreneurship and growth: lessons from an intellectual journey

Entrepreneurship and growth: lessons from an intellectual journey. Philippe Aghion, January 2017, Paper, “This lecture is the story of an intellectual journey, that of elaborating a new—Schumpeterian—theory of economic growth. A theory where (i) growth is generated by innovative entrepreneurs; (ii) entrepreneurial investments respond to incentives that are themselves shaped by economic policies and institutions; (iii) new innovations replace old technologies: in other words, growth involves creative destruction and therefore involves a permanent conflict between incumbents and new entrants. First, we motivate and then lay out the Schumpeterian paradigm and point to a set of empirical predictions which distinguish this paradigm from other growth models. Second, we raise four debates on which the Schumpeterian approach sheds new light: the middle income trap, secular stagnation, the recent rise in top income inequality, and firm dynamics. Third and last, we show how the paradigm can be used to think (or rethink) about growth policy design.Link

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Competitiveness and Growth Policy Design

Competitiveness and Growth Policy Design. Philippe Aghion, March 22, 2016, Book Chapter. “After decades during which governments in developed countries would privilege domestic demand as a main driver of economic growth, the advent of globalisation has forced governments to increasingly turn their attention to the competitiveness of the domestic economy, i.e. the extent to which a country can export its production abroad and thereby ‘exchange goods and services in which it is abundant for goods and services that it lacks’.Link

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What is the link between innovation and social mobility?

What is the link between innovation and social mobility? Philippe Aghion, July 30, 2015, Opinion. “Over the past decades, we have seen an accelerated increase in top income inequality worldwide, particularly in developed countries (Goldin and Katz 2008, Deaton 2013, Piketty 2013). In recent research (Aghion et al. 2015), we argue that in developed countries, starting with the US, innovation is an unavoidable part of the story. Thus, if we look at innovation (measured by the annual flow of patents) and top income inequality (measured by the top 1% income share) in the US since the 1960s, we see that these two follow parallel evolutions…Link

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Innovation, Income Inequality, and Social Mobility

Innovation, Income Inequality, and Social Mobility. Philippe Aghion, July 28, 2015. Paper. “In recent decades, there has been an accelerated increase in top income inequality, particularly in developed countries. This column argues that innovation partly accounts for the surge in top income inequality and fosters social mobility. In particular, the positive effect of innovation on social mobility is due to new innovators. Over the past decades, we have seen an accelerated increase in top income inequality worldwide, particularly in developed countries (Goldin and Katz 2008, Deaton 2013, Piketty 2013). In recent research (Aghion et al. 2015)…Link

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Innovation and Top Income Inequality

Innovation and Top Income Inequality. Philippe Aghion, June 2015, Paper. “In this paper we use cross-state panel data to show a positive and significant correlation between various measures of innovativeness and top income inequality in the United States over the past decades. Two distinct instrumentation strategies suggest that this correlation (partly) reflects a causality from innovativeness to top income inequality, and the effect is significant: for example, when measured by the number of patent per capita, innovativeness accounts on average across US states for around 17% of the total increase in the top 1% income share between 1975 and 2010…Link

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Lessons from Schumpeterian Growth Theory

Lessons from Schumpeterian Growth Theory. Philippe Aghion, May 2015, Paper. “By operationalizing the notion of creative destruction, Schumpeterian growth theory generates distinctive predictions on important microeconomic aspects of the growth process (competition, firm dynamics, firm size distribution, cross-firm and cross-sector reallocation) which can be confronted using rich micro data. In this process the theory helps reconcile growth with industrial organization and development economics.” Link

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Growth and Decentralization in Bad Times

Growth and Decentralization in Bad Times. Philippe Aghion, Raffaella Sadun, April 8, 2015, Paper. “Is decentralization beneficial to firm performance in “bad times”? We present a model where negative demand shocks increase the importance of rapid action, and improve the alignment of incentives of managers within firms. We test this idea exploiting the heterogeneous impact of the 2008-2009 Great Recession across industries and countries using firm-level cross-country panel data combined with our survey data on firm organization. Decentralized firms perform better than their centralized counterparts in terms of sales and TFP growth…” Link

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Creative Destruction and Subjective Wellbeing

Creative Destruction and Subjective Wellbeing. Philippe Aghion, April 2015, Paper. “In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing, using cross-sectional MSA level US data. We find that the effect of creative destruction on wellbeing is (i) unambiguously positive if we control for MSA-level unemployment, less so if we do not; (ii) more positive on future wellbeing than on current well-being; (iii) more positive in MSAs with faster growing industries or with industries that are less prone to outsourcing; (iv) more positive in MSAs within states with more generous unemployment insurance policies…Link

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