I provide empirical evidence that badly governed firms respond more to aggregate shocks than do well governed firms. I build a simple model where managers are prone to over-invest and where shareholders are more likely to tolerate such a behavior in good times. The model successfully explains the average profit differences as well as the cyclical behavior of sales, employment and investment for...

This essay analyzes the long-term lessons of the recent upturn and downturn in the telecommunications industry. It concludes that volatility and cyclicality will be an inherent part of the telecom sector in the future. To deal with such instabilities, companies and investors seek consolidation and cooperation. Government, too, is likely to stress stability more than before. Hence, an oligopoly ...

We present a version of the neoclassical model with an endogenous industry structure. We obtain multiple steady-state equilibria with an arbitrarily small degree of increasing returns to scale. While the most productive …rms operate across all the steady states, in a poverty trap less productive …rms operate as well. This results in lower average …rm productivity and total factor productivity. ...

We present a theory of spatial development. Manufacturing and services firms located in a continuous geographic area choose each period how much to innovate. Firms trade subject to transport costs and technology diffuses spatially. We apply the model to study the evolution of the US economy in the last half-century and find that it can generate the reduction in the manufacturing employment shar...

This study examines optimal public policy in a product cycle model where R&D firms innovate and imitate and households face nondiversifiable risk. The government controls product cycles by two policy instruments: patent length, i.e. the expected time an innovation is imitated, and patent width, i.e. the innovator’s profit after a successful imitation relative to that before. The main results ar...

1. Defensive inking behavior and gill withdrawal in ApIysia offer simple test systems in which the cellular and biophysial determinants of elementary behavioral acts can be examined. Since a good deal is known regarding both the behaviors and their underlying neural circuits, it is possible to compare directly these two defensive reflexes at the cellular level. 2. Both the ink and gill motor ne...

We study structural change in the historical consumption expenditure of United States, Kingdom, Canada, and Australia over more than a century. characterize most general class preferences time-additive setting that admits aggregation saving decision allows us to identify preference parameters from aggregate data. parameterize estimate such intertemporally aggregable (IA) discuss their propertie...

We document that nearly half of the global decline in agricultural employment was driven by new cohorts entering labor market. A dataset policy reforms supports an interpretation these cohort effects as human capital. Using a model frictional reallocation, we conclude capital growth led to sharp supply, accounting, at fixed prices, for 40 percent decrease employment. This aggregate effect is ha...

We study how external versus internal innovations promote economic growth through a tractable endogenous growth framework with multiple innovation sizes, multi-product firms, and entry/exit. Firms invest in external R&D to acquire new product lines and in internal R&D to improve their existing product lines. A baseline model derives the theoretical implications of weaker scaling for external R&...