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The growth and welfare analysis of patent and monetary policies in a Schumpeterian economy

Author

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  • Huang, Chien-Yu
  • Yang, Yibai
  • Cheng, Chu-Chuan

Abstract

This study compares the growth and welfare implications of patent policy and monetary policy in a Schumpeterian growth model where the market power of firms is subject to patent breadth whereas consumption and R&D investment are subject to cash-in-advance (CIA) constraints, respectively. The main findings are as follows. First, monetary policy is more effective than patent policy and the mix of these policies in terms of stimulating economic growth if initial patent protection in the economy is strong. Second, the welfare difference between patent policy and monetary policy is ambiguous, depending on the levels of predetermined instruments under these policies. However, these policy regimes are (weakly) dominated by their combination in terms of raising social welfare.

Suggested Citation

  • Huang, Chien-Yu & Yang, Yibai & Cheng, Chu-Chuan, 2017. "The growth and welfare analysis of patent and monetary policies in a Schumpeterian economy," International Review of Economics & Finance, Elsevier, vol. 52(C), pages 409-426.
    • Handle: RePEc:eee:reveco:v:52:y:2017:i:c:p:409-426
    DOI: 10.1016/j.iref.2017.03.010
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    More about this item

    Keywords

    Economic growth; Patent policy; Monetary policy; Social welfare;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

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