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Article: What Affects Innovation More: Policy or Policy Uncertainty?

TitleWhat Affects Innovation More: Policy or Policy Uncertainty?
Authors
Issue Date2017
PublisherCambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq
Citation
Journal of Financial and Quantitative Analysis, 2017, v. 52 n. 5, p. 1869-1901 How to Cite?
AbstractMotivated by a theoretical model, we examine for 43 countries whether it is policy or policy uncertainty that affects technological innovation more. Innovation activities, measured by patent-based proxies, are not, on average, affected by which policy is in place. Innovation activities, however, drop significantly during times of policy uncertainty measured by national elections. The drop is greater for more influential innovations (citations in the right tail, exploratory rather than exploitative innovations) and for innovation-intensive industries. We use close presidential elections and ethnic fractionalization to address endogeneity concerns. We uncover the mechanism underlying the main result by showing that the number of patenting inventors decreases with policy uncertainty. Political compromise, we conclude, encourages innovation.
Persistent Identifierhttp://hdl.handle.net/10722/258993
ISSN
2021 Impact Factor: 4.337
2020 SCImago Journal Rankings: 4.657
SSRN
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorBhattacharya, U-
dc.contributor.authorHsu, P-
dc.contributor.authorTian, X-
dc.contributor.authorXu, Y-
dc.date.accessioned2018-09-03T03:59:45Z-
dc.date.available2018-09-03T03:59:45Z-
dc.date.issued2017-
dc.identifier.citationJournal of Financial and Quantitative Analysis, 2017, v. 52 n. 5, p. 1869-1901-
dc.identifier.issn0022-1090-
dc.identifier.urihttp://hdl.handle.net/10722/258993-
dc.description.abstractMotivated by a theoretical model, we examine for 43 countries whether it is policy or policy uncertainty that affects technological innovation more. Innovation activities, measured by patent-based proxies, are not, on average, affected by which policy is in place. Innovation activities, however, drop significantly during times of policy uncertainty measured by national elections. The drop is greater for more influential innovations (citations in the right tail, exploratory rather than exploitative innovations) and for innovation-intensive industries. We use close presidential elections and ethnic fractionalization to address endogeneity concerns. We uncover the mechanism underlying the main result by showing that the number of patenting inventors decreases with policy uncertainty. Political compromise, we conclude, encourages innovation.-
dc.languageeng-
dc.publisherCambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq-
dc.relation.ispartofJournal of Financial and Quantitative Analysis-
dc.rightsJournal of Financial and Quantitative Analysis. Copyright © Cambridge University Press.-
dc.rightsThis article has been published in a revised form in [Journal of Financial and Quantitative Analysis] [http://doi.org/10.1017/S0022109017000540]. This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works. © Cambridge University Press.-
dc.titleWhat Affects Innovation More: Policy or Policy Uncertainty?-
dc.typeArticle-
dc.identifier.emailHsu, P: paulhsu@hku.hk-
dc.identifier.emailXu, Y: yanxuj@hku.hk-
dc.identifier.authorityHsu, P=rp01553-
dc.identifier.authorityXu, Y=rp01799-
dc.description.naturepostprint-
dc.identifier.doi10.1017/S0022109017000540-
dc.identifier.scopuseid_2-s2.0-85037971389-
dc.identifier.hkuros289087-
dc.identifier.volume52-
dc.identifier.spage1869-
dc.identifier.epage1901-
dc.identifier.isiWOS:000414267400003-
dc.publisher.placeUnited Kingdom-
dc.identifier.ssrn2368587-
dc.identifier.issnl0022-1090-

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