Journal article:
Inflation, liquidity and innovation

No Thumbnail Available
Files
There are no files associated with this item.
Date
September 2020
Editors
Evers, Michael
Schiffbauer, Marc
relationships.isEditorOf
Contact
Journal ISSN
Electronic ISSN
ISBN
Bibliographical data
Publisher
Series
URI (citable link)
ArXiv-ID
International patent number
Link to the license
oops
Project
EU project number
Open Access publication
Restricted until
Title in another language
Research Projects
Organizational Units
Journal Issue
Publication type
Journal article
Publication status
Published
Abstract
We present a simple model with financial frictions where inflation increases the cost faced by firms holding liquid assets to hedge risky production against expenditure shocks. Inflation tilts firms’ technology choice away from innovative activities and toward safer but return-dominated ones, and therefore reduces long-run growth. Our theory makes specific predictions about how the severity of this adverse effect depends on industry characteristics. We test these industry-specific predictions in a generalized difference-in-differences framework with novel harmonized firm-level data from 139 developing countries and a long panel of U.S. firms, overcoming small sample problems constraining previous work. We find that inflation affects the composition but not the overall quantity of investment. Moreover, consistent with our theoretical mechanism, we find that innovating firms display a stronger dependence on liquid assets, which, in turn, are negatively related to inflation.
Summary in another language
Subject (DDC)
330 Economics
Keywords
Inflation; Liquidity; Technology choice; Innovation; Investment
Published in
European Economic Review ; 128 (2020). - 103506. - Elsevier. - ISSN 0014-2921. - eISSN 1873-572X
Conference
Review
undefined / . - undefined, undefined. - (undefined; undefined)
Cite This
ISO 690EVERS, Michael, Stefan NIEMANN, Marc SCHIFFBAUER, 2020. Inflation, liquidity and innovation. In: European Economic Review. Elsevier. 128, 103506. ISSN 0014-2921. eISSN 1873-572X. Available under: doi: 10.1016/j.euroecorev.2020.103506
BibTex
@article{Evers2020-09Infla-50969,
  year={2020},
  doi={10.1016/j.euroecorev.2020.103506},
  title={Inflation, liquidity and innovation},
  volume={128},
  issn={0014-2921},
  journal={European Economic Review},
  author={Evers, Michael and Niemann, Stefan and Schiffbauer, Marc},
  note={Article Number: 103506}
}
RDF
<rdf:RDF
    xmlns:dcterms="http://purl.org/dc/terms/"
    xmlns:dc="http://purl.org/dc/elements/1.1/"
    xmlns:rdf="http://www.w3.org/1999/02/22-rdf-syntax-ns#"
    xmlns:bibo="http://purl.org/ontology/bibo/"
    xmlns:dspace="http://digital-repositories.org/ontologies/dspace/0.1.0#"
    xmlns:foaf="http://xmlns.com/foaf/0.1/"
    xmlns:void="http://rdfs.org/ns/void#"
    xmlns:xsd="http://www.w3.org/2001/XMLSchema#" > 
  <rdf:Description rdf:about="https://kops.uni-konstanz.de/server/rdf/resource/123456789/50969">
    <void:sparqlEndpoint rdf:resource="http://localhost/fuseki/dspace/sparql"/>
    <dc:language>eng</dc:language>
    <dcterms:issued>2020-09</dcterms:issued>
    <foaf:homepage rdf:resource="http://localhost:8080/"/>
    <dspace:isPartOfCollection rdf:resource="https://kops.uni-konstanz.de/server/rdf/resource/123456789/46"/>
    <dcterms:abstract xml:lang="eng">We present a simple model with financial frictions where inflation increases the cost faced by firms holding liquid assets to hedge risky production against expenditure shocks. Inflation tilts firms’ technology choice away from innovative activities and toward safer but return-dominated ones, and therefore reduces long-run growth. Our theory makes specific predictions about how the severity of this adverse effect depends on industry characteristics. We test these industry-specific predictions in a generalized difference-in-differences framework with novel harmonized firm-level data from 139 developing countries and a long panel of U.S. firms, overcoming small sample problems constraining previous work. We find that inflation affects the composition but not the overall quantity of investment. Moreover, consistent with our theoretical mechanism, we find that innovating firms display a stronger dependence on liquid assets, which, in turn, are negatively related to inflation.</dcterms:abstract>
    <dc:contributor>Niemann, Stefan</dc:contributor>
    <dcterms:title>Inflation, liquidity and innovation</dcterms:title>
    <dc:date rdf:datatype="http://www.w3.org/2001/XMLSchema#dateTime">2020-09-23T07:04:05Z</dc:date>
    <dcterms:available rdf:datatype="http://www.w3.org/2001/XMLSchema#dateTime">2020-09-23T07:04:05Z</dcterms:available>
    <dcterms:isPartOf rdf:resource="https://kops.uni-konstanz.de/server/rdf/resource/123456789/46"/>
    <dc:contributor>Evers, Michael</dc:contributor>
    <dc:creator>Niemann, Stefan</dc:creator>
    <dc:creator>Schiffbauer, Marc</dc:creator>
    <dc:contributor>Schiffbauer, Marc</dc:contributor>
    <dc:creator>Evers, Michael</dc:creator>
    <bibo:uri rdf:resource="https://kops.uni-konstanz.de/handle/123456789/50969"/>
  </rdf:Description>
</rdf:RDF>
Internal note
xmlui.Submission.submit.DescribeStep.inputForms.label.kops_note_fromSubmitter
Contact
URL of original publication
Test date of URL
Examination date of dissertation
Method of financing
Comment on publication
Alliance license
Corresponding Authors der Uni Konstanz vorhanden
International Co-Authors
Bibliography of Konstanz
Yes
Refereed
Yes
Link to research data
Description of supplementary data