Cournot Seminar – Domenico Delli Gatti (Catholic University Milan)
The 2024/04/11
From 2:00pm to 3:30pm
Event details :
Reversing entrepreneurial decline: Industrial policy experiments in an agent-based model
jointly written with Roberta Terranova and Enrico Maria Turco
Recent research has extensively investigated the causes of the decline of business dynamism in advanced economies, revealing several interconnected long-term trends such as increased market concentration, higher mark-ups, declining labor share, and slower productivity growth (Decker et al., 2016; Grullon et al., 2019; Calvino et al., 2020). Scholars highlight the decline in knowledge diffusion as a key factor in understanding these phenomena (Akcigit and Ates, 2021, 2023; Delli Gatti et al., 2023). Conversely, multiple shocks – including the COVID-19 pandemic and geopolitical conflicts – brought to the fore industrial policy as a viable means to address societal challenges and stimulate sustainable growth.
These two issues are often examined in isolation. The debate on the ongoing declining business dynamism has mainly focused on its underlying causes rather than potential remedies. On the other hand, economic analyses of industrial policies frequently overlook the characteristics of the landscape in which these policies are implemented, characterized by the dominance of a bunch of supersized firms and entrenched market power. Given this gap in the literature, some important questions arise: What are the most effective policies for reversing the decline in business dynamism? Which types of industrial policies yield greater efficacy within an environment marked by high market concentration and monopoly power?
This paper addresses this challenge by exploiting the macroeconomic agent-based model developed in Terranova and Turco (2022) and Delli Gatti et al. (2023) (henceforth, TTD). The TTD model is based on Assenza et al. (2015) – i.e., a macroeconomic ABM with capital and credit – and expand it to explore technical change and knowledge accumulation We employ the model to assess and compare various policy interventions, particularly focusing on the role of industrial and competition policies, in response to the declining business dynamism.
More on Domenico Delli Gatti : https://docenti.unicatt.it/ppd2/it/docenti/03684/domenico-delli-gatti/profilo
