How Much Does Innovation Drive Economic Growth ?

Since the 1800s, productivity is increasing in the US with no clear reason of why it is happening, with different flux for certain years as well as up and downs for some industries. Professor of finance Dimitri Papanikolaou has thought on the question and believes, as many, that innovation and technology boosts the productivity differences over time. But, how can we measure innovation ? Papanikolaou and his collaborators created a novel measure of innovation relying on the quality of patentand how different it is from earlier ones in its field, but not all innovations were patent especially prior the 1940s, making it impossible for them to be analyzed. Therefore, to measure the innovation, Papanikolaou decided to explore different methods such as analyzing the patent text as a quality test, predicting the productivity based on the quality of the patent and lastly drew conclusions on the future of patents and innovation, proving that innovation and technical progress correlated with productivity. Read More >>

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