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Article: What Affects Innovation More: Policy or Policy Uncertainty?
Title | What Affects Innovation More: Policy or Policy Uncertainty? |
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Authors | |
Issue Date | 2017 |
Publisher | Cambridge 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? |
Abstract | Motivated 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 Identifier | http://hdl.handle.net/10722/258993 |
ISSN | 2023 Impact Factor: 3.7 2023 SCImago Journal Rankings: 3.980 |
SSRN | |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Bhattacharya, U | - |
dc.contributor.author | Hsu, P | - |
dc.contributor.author | Tian, X | - |
dc.contributor.author | Xu, Y | - |
dc.date.accessioned | 2018-09-03T03:59:45Z | - |
dc.date.available | 2018-09-03T03:59:45Z | - |
dc.date.issued | 2017 | - |
dc.identifier.citation | Journal of Financial and Quantitative Analysis, 2017, v. 52 n. 5, p. 1869-1901 | - |
dc.identifier.issn | 0022-1090 | - |
dc.identifier.uri | http://hdl.handle.net/10722/258993 | - |
dc.description.abstract | Motivated 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.language | eng | - |
dc.publisher | Cambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq | - |
dc.relation.ispartof | Journal of Financial and Quantitative Analysis | - |
dc.rights | Journal of Financial and Quantitative Analysis. Copyright © Cambridge University Press. | - |
dc.rights | This 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.title | What Affects Innovation More: Policy or Policy Uncertainty? | - |
dc.type | Article | - |
dc.identifier.email | Hsu, P: paulhsu@hku.hk | - |
dc.identifier.email | Xu, Y: yanxuj@hku.hk | - |
dc.identifier.authority | Hsu, P=rp01553 | - |
dc.identifier.authority | Xu, Y=rp01799 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1017/S0022109017000540 | - |
dc.identifier.scopus | eid_2-s2.0-85037971389 | - |
dc.identifier.hkuros | 289087 | - |
dc.identifier.volume | 52 | - |
dc.identifier.spage | 1869 | - |
dc.identifier.epage | 1901 | - |
dc.identifier.isi | WOS:000414267400003 | - |
dc.publisher.place | United Kingdom | - |
dc.identifier.ssrn | 2368587 | - |
dc.identifier.issnl | 0022-1090 | - |