10.17889/E109679
Tenreyro, Silvana
Koren, Miklós
Replication data for: Technological Diversification
ICPSR Inter-university Consortium for Political and Social Research
2013
10.1257/aer.103.1.378
10.1257/aer.103.1.378
V0
Economies at early stages of development are frequently shaken by
large changes in growth rates, whereas advanced economies tend
to experience relatively stable growth rates. To explain this pattern,
we propose a model of technological diversification. Production
makes use of input-varieties that are subject to imperfectly correlated
shocks. Endogenous variety adoption by firms raises average
productivity and provides diversification benefits against variety-specific shocks. Firm-level and aggregate volatility thus decline as a
by-product of the development process. We quantitatively assess the
model's predictions and find that it can generate patterns of volatility
and development consistent with the data. (JEL D21, D24, E23,
O33, O47)