Ana Cecilia Fieler from Yale University will present "Growing through Vintages"

Abstract: We study the reallocation of research, entrepreneurship and labor across finely defined industries using historical data from the United States and a new semi-endogenous growth model. In the model, households have nested CES preferences, and researchers choose between creating new varieties or new nests. The balanced growth path is in closed form. In it, the arrival of a new nest is followed by a boom in new varieties and industry value added that eventually peters out as newer and better nests render the nest obsolete. Booms and bust cycles in the patent data are pronounced and are associated to value added growth in the Census of Manufactures. In the estimated model, most economic growth stems from the higher productivity of new breakthrough ideas (new nests), and not from an increase in their frequency.