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UID:e79c25a73d6a44a468fd869d23c1623f
CATEGORIES:Seminars
CREATED:20260205T082215
SUMMARY:Lunch Seminar: Fabio Bertolotti - Bank of Italy 
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nCapital Replacement and Innovation Dynamics\n\n\nAbstract:\nWe analyze 
 the role of endogenous capital-embodied innovation for macroeconomic dynami
 cs. We provide empirical evidence that new-product introduction by capital-
 goods producers is an engine of long-run technological progress, but drops 
 during recessions, when investment demand is weak. We then develop a model 
 of investment with heterogeneous firms and endogenous capital-embodied inno
 vation. The model features two endogenous state variables: (i) the cross-se
 ctional distribution of firms and (ii) the quality of new capital. The frac
 tion of firms replacing their capital determines the incentives for capital
 -goods producers to innovate through a market-size effect. In turn, growth 
 in new-capital quality induces final-good producers to replace their old ca
 pital. This feedback provides a propagation mechanism for macroeconomic sho
 cks and generates fluctuations in productivity. We analyze efficiency in th
 e model and show that capital-replacement subsidies have stronger stimulus 
 effects than innovation subsidies in the short run, but are less desirable 
 in the long run.\n
DTSTAMP:20260409T194552Z
DTSTART:20260219T130000Z
DTEND:20260219T140000Z
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