Animal Spirits Meets Creative Destruction

P. Francois, H. Lloyd-Ellis

Research output: Working paperDiscussion paperOther research output

275 Downloads (Pure)

Abstract

We show how a Schumpeterian process of creative destruction can induce coordination in the timing of entrepreneurial activities across diverse sectors of the economy.Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process.The cyclical equilibrium that we study has a higher long-run growth rate but lower welfare than the corresponding acyclical one.We find that the cycles generated by our model share some features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages46
Volume2001-36
Publication statusPublished - 2001

Publication series

NameCentER Discussion Paper
Volume2001-36

Fingerprint

Creative destruction
Animal spirits
Long-run growth
Productivity improvement
Entrepreneurs
Business cycles
Profit
Entrepreneurial activity
Joseph Schumpeter

Keywords

  • economic growth
  • entrepreneurship
  • innovation
  • business cycles

Cite this

Francois, P., & Lloyd-Ellis, H. (2001). Animal Spirits Meets Creative Destruction. (CentER Discussion Paper; Vol. 2001-36). Tilburg: Macroeconomics.
Francois, P. ; Lloyd-Ellis, H. / Animal Spirits Meets Creative Destruction. Tilburg : Macroeconomics, 2001. (CentER Discussion Paper).
@techreport{d583b352a7f4434f873193fc421c7989,
title = "Animal Spirits Meets Creative Destruction",
abstract = "We show how a Schumpeterian process of creative destruction can induce coordination in the timing of entrepreneurial activities across diverse sectors of the economy.Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process.The cyclical equilibrium that we study has a higher long-run growth rate but lower welfare than the corresponding acyclical one.We find that the cycles generated by our model share some features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth.",
keywords = "economic growth, entrepreneurship, innovation, business cycles",
author = "P. Francois and H. Lloyd-Ellis",
note = "Pagination: 46",
year = "2001",
language = "English",
volume = "2001-36",
series = "CentER Discussion Paper",
publisher = "Macroeconomics",
type = "WorkingPaper",
institution = "Macroeconomics",

}

Francois, P & Lloyd-Ellis, H 2001 'Animal Spirits Meets Creative Destruction' CentER Discussion Paper, vol. 2001-36, Macroeconomics, Tilburg.

Animal Spirits Meets Creative Destruction. / Francois, P.; Lloyd-Ellis, H.

Tilburg : Macroeconomics, 2001. (CentER Discussion Paper; Vol. 2001-36).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Animal Spirits Meets Creative Destruction

AU - Francois, P.

AU - Lloyd-Ellis, H.

N1 - Pagination: 46

PY - 2001

Y1 - 2001

N2 - We show how a Schumpeterian process of creative destruction can induce coordination in the timing of entrepreneurial activities across diverse sectors of the economy.Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process.The cyclical equilibrium that we study has a higher long-run growth rate but lower welfare than the corresponding acyclical one.We find that the cycles generated by our model share some features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth.

AB - We show how a Schumpeterian process of creative destruction can induce coordination in the timing of entrepreneurial activities across diverse sectors of the economy.Consequently, a multi-sector economy, in which sector-specific, productivity improvements are made by independent, profit-seeking entrepreneurs, can exhibit regular booms, slowdowns and downturns as an inherent part of the long-run growth process.The cyclical equilibrium that we study has a higher long-run growth rate but lower welfare than the corresponding acyclical one.We find that the cycles generated by our model share some features of actual business cycles, and that across cycling economies, a negative relationship emerges between volatility and growth.

KW - economic growth

KW - entrepreneurship

KW - innovation

KW - business cycles

M3 - Discussion paper

VL - 2001-36

T3 - CentER Discussion Paper

BT - Animal Spirits Meets Creative Destruction

PB - Macroeconomics

CY - Tilburg

ER -

Francois P, Lloyd-Ellis H. Animal Spirits Meets Creative Destruction. Tilburg: Macroeconomics. 2001. (CentER Discussion Paper).