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Innovation, Finance, and Economic Growth : an agent-based model



Type:   Working paper
Titre:   Innovation, Finance, and Economic Growth : an agent-based model
Auteur(s):   Fagiolo, Giorgio - Laboratory of Economics and Management (LEM) (Auteur)
Giachini, Daniele - Scuola Superiore Sant'Anna (Auteur)
Roventini, Andrea - Observatoire français des conjonctures économiques (Auteur)
Date de publication:   2017-11
Éditeur:   PARIS  :  Observatoire français des conjonctures économiques
Mots-clés:   [en] Agent based model, Innovation, Exploration vs exploitation, Endogenous Growth, Banking sector, Finance Growth Nexus
JEL:   C63,  G21,  O30,  O31
Résumé:   [en] This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the financegrowth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that both exploration and imitation require resources provided by banks, which pool agent savings and finance new projects via loans. We find that banking activity has a positive impact on growth. However, excessive financialization can hamper growth. In- deed, we find a significant and robust inverted-U shaped relation between financial depth and growth. Overall, our results stress the fundamental (and still poorly understood) role played by innovation in the finance-growth nexu


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