Young Economist best paper award for Marco Luca Pinchetti
Marco Luca Pinchetti has been awarded the Young Economist Best Paper Award at the 6th Workshop in Macro Banking and Finance.
His paper entitled “Creative Destruction Cycles: Schumpeterian Growth in an Estimated DSGE Model” can be found here
Abstract: In this paper I incorporate a Schumpeterian mechanism of creative destruction in a standard DSGE framework. In the model, a sector of forward-looking profit maximizing innovators determines the economy’s TFP growth rate. I estimate the model with Bayesian methods, and show that models featuring an endogenous TFP channel can empirically outperform models that exhibit standard, exogenous productivity dynamics. The paper provides a comprehensive comparative assessment of the impact of the endogenous TFP channel in an estimated fully-fledged DSGE model. The variance decomposition analysis shows that endogenous TFP is a powerful channel of transmission of adverse shocks throughout the business cycle. The estimates suggest that the 35% of the productivity growth rate fluctuations had endogenous origins during the Great Recession.