We investigate the effects of a credit crunch in an economy where firms can retain a mature technology or adopt a new technology. We show that firms' collateral eases firms' access to credit and investment but can also inhibit firms' innovation. When this occurs, a contraction in the price of collateral assets squeezes collateral-poor firms out of the credit market but fosters the innovation of collateral-rich firms. The analysis reveals that the credit and asset market policies adopted during recent credit market crises can boost investment but slow down innovation. We find that the predictions of the model are consistent with the innovation patterns of a large sample of European firms during the 2008-2010 credit crisis.

Credit Crunches, Asset Prices and Technological Change / Araujo, Luis; Cao, Qingqing; Minetti, Raoul; Murro, Pierluigi. - In: REVIEW OF ECONOMIC DYNAMICS. - ISSN 1094-2025. - 32:(2019), pp. 153-179. [10.1016/j.red.2019.02.001]

Credit Crunches, Asset Prices and Technological Change

Pierluigi Murro
2019

Abstract

We investigate the effects of a credit crunch in an economy where firms can retain a mature technology or adopt a new technology. We show that firms' collateral eases firms' access to credit and investment but can also inhibit firms' innovation. When this occurs, a contraction in the price of collateral assets squeezes collateral-poor firms out of the credit market but fosters the innovation of collateral-rich firms. The analysis reveals that the credit and asset market policies adopted during recent credit market crises can boost investment but slow down innovation. We find that the predictions of the model are consistent with the innovation patterns of a large sample of European firms during the 2008-2010 credit crisis.
Credit crunch; Technological change; Collateral
File in questo prodotto:
File Dimensione Formato  
RED_19.pdf

Solo gestori archivio

Tipologia: Versione dell'editore
Licenza: DRM non definito
Dimensione 1.08 MB
Formato Adobe PDF
1.08 MB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/184082
Citazioni
  • Scopus 1
  • ???jsp.display-item.citation.isi??? 1
social impact