Francisco Buera, Chicago Fed: The Global Diffusion of Ideas

ESOP seminar. Francisco Buera is senior economist at the Federal Reserve Bank of Chicago. He will present a paper entitled "The Global Diffusion of Ideas", written jointly with Ezra Oberfield.

Francisco Buera. Photo: Chicago Fed


We provide a tractable theory of innovation and technology di usion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.


Host: Kjetil Storesletten

Published Sep. 12, 2016 1:41 PM - Last modified Sep. 23, 2016 3:28 PM