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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

7️⃣The paper has many more interesting results, including implications for other secular trends & welfare Check out the paper (jamesparon.com) for these results + details about the empirical evidence, growth model, and estimation! And other great papers!

jamesparon.com

James D. Paron

James Paron's personal website. I am a Ph.D. candidate in Finance at the Wharton School of the University of Pennsylvania. My research interests include asset pricing, household finance, and macro-fin...

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

6️⃣This decline in research productivity explains most of the 📉 in growth and 📈in market value. As in the data, all of the market boom comes from a reallocation to high-valuation firms. Why? High-valuation firms shift from R&D to M&A, concentrating production in their hands

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

5️⃣He estimates that the decline in R&D-to-value implies that research productivity fell by ~50% since 1975. In other words, it is half as easy to come up with a new idea today as it was 50 years ago.

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

4️⃣He builds a Schumpeterian model of growth and asset prices in which heterogeneous firms can grow through R&D and M&A. After estimating the model, he uses it to: – Estimate the decline in innovation productivity – Quantify its effect on economic growth and valuations

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

3️⃣ He documents 3 key stylized facts about 1970–2020: – Aggregate R&D fell relative to value – Aggregate M&A doubled relative to R&D – A compositional change explains the rise in aggregate valuation ratios: markets are more and more dominated by firms high valuation ratios

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

2️⃣ The rising market valuation of profits since 1970 should have encouraged firms to innovate, but R&D investment fell. 🧩How do we reconcile stagnating growth (and R&D) with a booming stock market? James solves this puzzle using micro data and a Schumpeterian growth model.

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Sylvain Catherine @sylvain-catherine.bsky.social · 02/12/2024

🧵My coauthor James Paron is on the market! His paper reconciles apparently contradictory trends since 1970: 📉declining economic growth 📈rising stock market valuations His explanation: Innovation got harder➡️ R&D fell, M&A rose ➡️ top firms pushed the aggregate stock market up

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Sylvain Catherine @sylvain-catherine.bsky.social · 30/11/2024

I am not migrating from Twitter to Bluesky. Rather, I will use this account to tweet more about academic economics and mostly in English. At the same time, I will keep my Twitter account to engage with the general public, French political debates, and general trolling.

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