Liquidity, Innovation, And Endogenous Growth

We build a model of endogenous, innovation-driven growth in which innovative firms have costly access to outside financing and hoard cash reserves to maintain financial flexibility. We show that financing frictions slow down Schumpeterian creative destruction by discouraging entry. As a result, financing frictions importantly affect the composition of growth, by reducing the contribution of entrants but spurring the contribution of incumbents. We investigate the net impact of these countervailing effects on the equilibrium growth rate and welfare.


Published in:
Journal of Financial Economics
Year:
2018
Keywords:
Other identifiers:
Dataset(s):
url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2892747
Additional link:
Laboratories:




 Record created 2018-10-15, last modified 2019-05-07


Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)