Technological Revolutions and Stock Prices

Technological Revolutions and Stock Prices

During technological revolutions, stock prices of innovative firms tend to exhibit high volatility and bubble-like patterns, which are often attributed to investor irrationality. We develop a general equilibrium model that rationalizes the observed price patterns. The high volatility results from high uncertainty about the average productivity of a new technology. Investors learn about this pro...

Technical Appendix to Accompany Technological Revolutions and Stock Prices

Technological Revolutions

In skill-biased (de-skilling) technological revolutions learning investments required by new machines are greater (smaller) than those required by preexisting machines. Skill-biased (de-skilling) revolutions trigger reallocations of capital from slow(fast-) to fast(slow-) learning workers, thereby reducing the relative and absolute wages of the former. The model of skill-biased (de-skilling) re...

Technological revolutions and techno-economic paradigms

This paper locates the notion of technological revolutions in the NeoSchumpeterian effort to understand innovation and to identify the regularities, continuities and discontinuities in the process of innovation. It looks at the microand meso-foundations of the patterns observed in the evolution of technical change and the interrelations with the context that shape the rhythm and direction of in...

Growth Accounting with Technological Revolutions

G enerally, technological progress proceeds at a slow and measured pace, with only incremental improvements seen in existing products and technologies in the economy. At times, however, the pace accelerates, and the economy experiences a technological revolution during which radically new products and technologies are introduced. Recent discussions suggest that the world economy is currently ex...