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Results 11 resources
Aghion, P., & Stein, J. C. (2008). Growth Versus Margins: Destabilizing Consequences of Giving the Stock Market What It Wants. The Journal of Finance, 63, 1025–1058.
We develop a model in which a firm can devote effort either to increasing sales growth, or to improving per‐unit profit margins. If the firm's manager cares about the current stock price, she will favor the growth strategy when the market pays more attention to growth numbers. Conversely, it can be rational for the market to weight growth measures more heavily when it is known that the firm is following a growth strategy. This two‐way feedback between firms' strategies and the market's pricing rule can lead to excess volatility in real variables, even absent any external shocks.
Aghion, P., Akcigit, U., & Howitt, P. (2015). Lessons from Schumpeterian Growth Theory. American Economic Review, 105, 94–99.
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.
Aghion, P., Griffith, R., & Howitt, P. (2006). Vertical Integration and Competition. American Economic Review, 96, 97–102.
Aghion, P., Bergeaud, A., & Van Reenen, J. (2023). The Impact of Regulation on Innovation. American Economic Review, 113, 2894–2936.
We present a framework that can be used to assess the equilibrium impact of regulation on endogenous innovation with heterogeneous firms. We implement this model using French firm-level panel data, where there is a sharp increase in the burden of labor regulations on companies with 50 or more employees. Consistent with the model's qualitative predictions, we find a fall in the fraction of innovating firms just to the left of the regulatory threshold. Furthermore, we find a reduction in the innovation response of firms to demand shocks just below the threshold. Regulation reduces aggregate innovation by 5.7 percent.
Aghion, P., Van Reenen, J., & Zingales, L. (2013). Innovation and Institutional Ownership. American Economic Review, 103, 277–304.
We find that greater institutional ownership is associated withmore innovation. To explore the mechanism, we contrast the "lazymanager" hypothesis with a model where institutional ownersincrease innovation incentives through reducing career risks. Theevidence favors career concerns. First, we find complementaritybetween institutional ownership and product market competition,whereas the lazy manager hypothesis predicts substitution. Second,CEOs are less likely to be fired in the face of profit downturnswhen institutional ownership is higher. Finally, using instrumentalvariables, policy changes, and disaggregating by type of institutionalowner, we argue that the effect of institutions on innovation is causal.(JEL G23, G32, L25, M10, O31, O34)
Acemoglu, D., Aghion, P., Bursztyn, L., & Hemous, D. (2012). The Environment and Directed Technical Change. American Economic Review, 102, 131–166.
This paper introduces endogenous and directed technical change in a growth model with environmental constraints. The final good is produced from "dirty" and "clean" inputs. We show that: (i) when inputs are sufficiently substitutable, sustainable growth can be achieved with temporary taxes/subsidies that redirect innovation toward clean inputs; (ii) optimal policy involves both "carbon taxes" and research subsidies, avoiding excessive use of carbon taxes; (iii) delay in intervention is costly, as it later necessitates a longer transition phase with slow growth; and (iv) use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire. (JEL O33, O44, Q30, Q54, Q56, Q58)
Aghion, P., Akcigit, U., Deaton, A., & Roulet, A. (2016). Creative Destruction and Subjective Well-Being. American Economic Review, 106, 3869–3897.
In this paper we analyze the relationship between turnover-driven growth and subjective well-being. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not; (ii) job creation has a positive and job destruction has a negative impact on well-being; (iii) job destruction has a less negative impact in areas with more generous unemployment insurance policies; and (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross sectional MSA (metropolitan statistical area)-level and individual-level data provide empirical support to these predictions.
Aghion, P., Burgess, R., Redding, S. J., & Zilibotti, F. (2008). The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India. American Economic Review, 98, 1397–1412.
We study whether the effects on registered manufacturing output of dismantlingthe License Raj—a system of central controls regulating entry and productionactivity in this sector—vary across Indian states with different labor marketregulations. The effects are found to be unequal across Indian states with differentlabor market regulations. In particular, following delicensing, industrieslocated in states with pro-employer labor market institutions grew more quicklythan those in pro-worker environments. (JEL J50, L52,L60, O14, O15, O25)
Aghion, P., Dewatripont, M., Kolev, J., Murray, F., & Stern, S. (2010). The Public and Private Sectors in the Process of Innovation: Theory and Evidence from the Mouse Genetics Revolution. American Economic Review, 100, 153–158.
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