Publications
A review of our research highlights and publications in 2022.
In 2022 the researchers at KOF continued to publish their empirical research in academic journals and other prestigious working papers series. KOF’s series of working papers achieved a minor milestone last year with the publication of its 500th paper.
The publication of papers – especially in peer-reviewed journals – is an indicator of the quality of academic research. A paper published by Michael König and his co-authors in the leading journal Econometrica, for example, examined the question ‘From Imitation to Innovation: Where is All That Chinese R&D Going?’. This paper’s authors construct and estimate a total-factor productivity growth model that is driven by innovation and technology diffusion through random interactions.
This model is designed to gain new insights into the nature and impact of the boom in research & development (R&D) spending in China in recent years. Despite the numerous distortions highlighted in previously published studies, this R&D investment appears to have significantly contributed to productivity growth in China. Nonetheless, the productivity returns to R&D investment in China are lower than those in Taiwan. Moreover, the widespread production wedges often encourage the wrong firms to invest in R&D, which reduces the productivity of R&D spending.
A further key finding is that the misallocation of investment has significant dynamic effects. To the extent that large companies have stronger incentives to invest in R&D, the misallocation of resources distorts firms’ natural comparative advantage in managing the innovation process, and so it ultimately slows economic growth. external pagehttps://doi.org/10.3982/ECTA18586.
A further paper entitled ‘The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data’, which appeared in The Review of Economics and Statistics, examines how increases in minimum wages feed through into the prices charged by supermarkets in the United States. Michael Siegenthaler and his co-authors base their analysis on high-frequency scanner data and use a large number of rises in minimum wages at state level between 2001 and 2012.
Their analysis shows that a 10 per cent increase in the minimum wage leads to a rise of 0.36 per cent in food prices. This amount is consistent with such cost increases being fully passed on to consumer prices. The authors also show that price adjustments usually take place during the three months after the relevant minimum-wage legislation has been passed rather than after it has already been implemented. This suggests that food price formation is forward-looking. external pagehttps://doi.org/10.1162/rest_a_00981.