Uncertainty-Induced Reallocations and Growth

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Event details

Date and time 12.03.2021 10:0011:30  
Place and room
Zoom
Speaker Mariano CROCE, Bocconi University
Category Conferences - Seminars

Focusing on both micro and aggregate U.S. data, we show the existence of a signi cant link between aggregate uncertainty and reallocation of resources away from R&D-intensive capital. This link is important because a decrease in the aggregate share of R&D-oriented capital forecasts lower medium-term growth. In a multi-sector production economy in which (i) growth is endogenously supported by risky R&D investments, and (ii) the representative agent is volatility-risk averse and has access to other safer technologies that do not support growth, uncertainty shocks have a rst-order negative impact on medium-term growth and welfare.