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Risk, variety and volatility: innovation,growth and stock prices in old and new

journal contribution
posted on 2023-06-08, 19:22 authored by Mariana Mazzucato
The paper studies the patterns of volatility in firm growth rates and stock prices during the early phase of the life-cycle of an old economy industry, the US automobile industry from 1900-1930, and a new economy industry, the US PC industry from 1974-2000. In both industries, firm growth rates are more volatile in the period in which innovation is the most “radical”. This is also the period in which stock prices are more volatile. The comparison sheds light on the co-evolution of industrial and financial volatility and the relationship between this co-evolution and mechanisms of Schumpetarian creative destruction. Results provide insight into the debate on whether the statistical behavior of firm growth rates is well represented by Gibrat’s Law.

History

Publication status

  • Published

Journal

Journal of Evolutionary Economics

ISSN

0936-9937

Publisher

Springer Verlag

Issue

5

Volume

13

Page range

491-512

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2015-01-06

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