题目：Virtue of Bad Times and Financial Market Frictions

主讲人：Ohyang, Min Associate Professor, Tsinghua University

Abstract

Schumpeter (1939) proposes that recessions have virtue in promoting growth activities. However, this view is at odds with pro-cyclical R&D. We revisit the "virtue of bad times" theoretically and empirically. Our theory suggests that recessions have such virtue only when the cyclicality of innovationís marginal opportunity cost dominates that of its marginal expected return; but binding Onancial constraints can hinder such virtue, preventing innovation from rising during recessions. Our theory is carried to an industry panel of R&D and output. Our evidence suggests that recessions indeed have potential virtue, but such virtue is hindered by Onancial-market frictions.