Adam Smith Business School

Dr Marija Vukotić, University of Warwick

"Innovation During Challenging Times"
Thursday, 09 May 2024. 15:00-16:30
Room 141, Adam Smith Business School & PGT Hub

Abstract

When is receiving positive news regarding future technological advancements most impactful on the economy: during recessions or economic booms? A recession might represent an opportune time for investing in relatively cheaper, productivity-enhancing activities. However, tighter financial constraints during recessions might hinder the ability to secure funds for these activities. We explore this dichotomy by exploiting patent-based innovation shocks, which are constructed using changes in stock market valuations of firms that obtain patent grants. We find that aggregate patent-based innovation shocks have a greater impact on the economy during recessions, leading to a more significant increase in private investment. Additionally, our exploration of firm-level data uncovers supporting evidence that firms tend to boost their capital investment and R&D expenditures in response to these innovation shocks, particularly during recessions. The financial constraints of firms play a crucial role, with capital investments by firms with low default risk driving the larger impact observed during recessions.

Bio

Dr Marija Vukotić is an associate professor at the University of Warwick. Her research interests are: Macroeconomics, Business Cycles; Economics of Innovation and Technical Change; and International Macroeconomics. She is the co-ordinator of the Macro and International Research group at Warwick.

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For further information, please contact business-school-research@glasgow.ac.uk

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First published: 13 March 2024