IFin Seminar, Max Croce - Bocconi University

Institute of Finance

Date: 21 March 2024 / 12:25 - 13:40



Speaker: Max Croce - Bocconi University

Title: "Uncertainty-Induced Reallocations, Innovation, and Growth"

Date: March 21, 2024

Time: 12:25 - 13:40

Room: Red Room (Exec Center)

Lugano West Campus





Focusing on both micro and aggregate U.S. data, we document the existence of a significant link between aggregate uncertainty, capital market valuations and reallocation of resources away from risky R&D-intensive capital. This link is important because a decrease in the aggregate share of R&D-oriented investments forecasts lower medium-term growth. We study a three-sector model in which one sector features relatively risky R&D-intensive capital essential to sustain growth, whereas the other sectors feature safer capital that is not innovation-intensive. Our model accounts for our empirical evidence as uncertainty shocks prompt sectoral reallocations and feature a first-order negative impact on medium-term growth.


Paper <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2872105>]