Browsing by Author "Afonso, Oscar"
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- Economic growth, the high-tech sector, and the high skilled : Theory and quantitative implicationsPublication . Gil, Pedro Mazeda; Afonso, Oscar; Brito, PauloEurope’s “2020 Strategy” has the main goal of stimulating economic growth by increasing the weight of the high-tech sector and the share of high-skilled workers. However, cross-country European data suggests the relationship between economic growth and both the technology structure and the skill structure is statistically insignificant. We investigate an analytical mechanism that connects these facts by extending a directed-technical-change growth model and taking it to the data. Under high relative barriers to entry into the high-tech sector and scale effects we replicate the empirical relationships. We derive quantitative policy implications on the effects of a reduction of barriers to entry.
- Economic growth, the high-tech sector, and the high skilled: theory and quantitative implicationsPublication . Gil, Pedro Mazeda; Afonso, Oscar; Brito, PauloEurope's “2020 Strategy” has the main goal of stimulating economic growth by increasing the weight of the high-tech sector and the share of high-skilled workers. However, cross-country European data is at odds with that strategy: the relationship between economic growth and both the technology structure and the skill structure is statistically insignificant, although the last two are positively related. We investigate an analytical mechanism that connects these facts by extending a directed technical change growth model in several directions. We take the model to the data by calibrating it after the estimation of key structural relationships with cross-country data. When we allow for high relative barriers to entry into the high-tech sector and scale effects on growth we are able to replicate the empirical relationships. We derive quantitative policy implications on the effects of education policy on economic growth when leveraged by industrial policy aiming to reduce barriers to entry into the high-tech sector.
- Growth and firm dynamics with horizontal and vertical R&DPublication . Gil, Pedro Mazeda; Brito, Paulo; Afonso, OscarThis paper develops a tournament model of horizontal and vertical R&D under a lab-equipment specification. A key feature is that the overall growth rate is endogenous, as the splitting of the growth rate between the intensive and the extensive margin is itself endogenous. This setup gives rise to strong inter-R&D composition effects, while making economic growth and firm dynamics closely related, both along the balanced-growth path and transition. The model hence offers a (qualitative) explanation for the negative or insignificant empirical correlation between aggregate R&D intensity and both firm size and economic growth, a well-known puzzle in the growth literature.
- Growth and firm dynamics with horizontal and vertical R&DPublication . Gil, Pedro Mazeda; Brito, Paulo; Afonso, OscarA negative or nonsignificant empirical correlation between aggregate R&D intensity and the economic growth rate is a well-known fact in the empirical growth literature, but scarcely addressed in the theoretical growth literature. This paper develops an endogenous-growth model that explores the interrelation between horizontal and vertical R&D under a lab-equipment specification that is consistent with that stylized fact. A key feature is that the growth rate is fully endogenous both on the intensive and on the extensive margin. Strong composition effects between horizontal and vertical R&D, along both transition and the balanced-growth path, then emerge as the main mechanism producing those results. This setting also allows us to obtain a relationship between economic growth and firm dynamics that is consistent with the empirical facts.