Patent-Based News Shocks
The Review of Economics and Statistics
2022
What do patents tell us about the economic effects of future technological improvements? We identify aggregate and industry-level patent-based news shocks by exploiting changes in stock market valuations of firms that obtain patent grants. Our shocks resemble diffusion news: they do not affect total factor productivity in the short run but induce a strong permanent effect after five years. We find that patent-based news shocks produce positive co-movement between consumption, output, investment, and hours. They also generate positive responses in inflation and in the federal funds rate, consistent with standard New Keynesian models.
- DOI
- 10.1162/rest_a_00943
- Volume
- 104 (1)
- Pages
- 51-66
- Language
- en
- Export
- BibTeX
- Sources
- crossref openalex