This paper constructs a two-country (Home and Foreign) general equilibrium model of Schumpeterian growth without scale effects. The scale effects property is removed by introducing a distinct specification in the knowledge production function which generates semiendogenous growth. In this model of semi-endogenous growth, an increase in the rate of population growth rate raises Home's relative wage and lowers its range of goods exported toForeign. An increase in the size of innovations increases Home's relative wage but with an ambiguous effect on its comparative advantage. The model generates a unique steady-state equilibrium in which there is complete specialization in both goods and R&D production within each country.JEL Classification: F10, O3, O4

Abstract. General purpose technologies (GPTs) are drastic innovations, such as electrification, the transistor, and the Internet, that are characterized by the pervasiveness in use, innovational complementarities, and technological dynamism. The transitional and long-run dynamic effects of a GPT are analyzed within a quality-ladders model of scale-invariant Schumpeterian growth. The diffusion path of a GPT across a continuum of industries is governed by S-curve dynamics. The initial balanced growth equilibrium exhibits endogenous growth and no industry has adopted the new GPT. The final steady-state equilibrium, in which all industries have adopted the new GPT, exhibits a higher steady-state Schumpeterian growth and a higher per capita R&D. The model generates a unique, stable saddle-path. During the transition path, the measure of industries that adopt the new GPT increases, consumption per capita falls, and the interest rate increases. The growth rate of the stock market depends negatively on the rate of GPT diffusion process and the magnitude of the GPT-ridden R&D productivity gains, and positively on the rate of population growth. It also follows a U-shaped path during the diffusion process of the new GPT. Finally, the model generates transitional growth cycles of per-capita GNP.

Abstract. General purpose technologies (GPTs) are drastic innovations, such as electrification, the transistor, and the Internet, that are characterized by the pervasiveness in use, innovational complementarities, and technological dynamism. The transitional and long-run dynamic effects of a GPT are analyzed within a quality-ladders model of scale-invariant Schumpeterian growth. The diffusion path of a GPT across a continuum of industries is governed by S-curve dynamics. The initial balanced growth equilibrium exhibits endogenous growth and no industry has adopted the new GPT. The final steady-state equilibrium, in which all industries have adopted the new GPT, exhibits a higher steady-state Schumpeterian growth and a higher per capita R&D. The model generates a unique, stable saddle-path. During the transition path, the measure of industries that adopt the new GPT increases, consumption per capita falls, and the interest rate increases. The growth rate of the stock market depends negatively on the rate of GPT diffusion process and the magnitude of the GPT-ridden R&D productivity gains, and positively on the rate of population growth. It also follows a U-shaped path during the diffusion process of the new GPT. Finally, the model generates transitional growth cycles of per-capita GNP.

Over the past decade, the banking industry has incurred over $300 billion in litigation and related legal costs. We analyzed the litigation expense data and corporate governance data of seven US and six European banking institutions. The 13 banking intuitions incurred nearly $200 billion in litigation expenses, roughly two-thirds of the total litigation expense incurred by the entire banking industry. We compared corporate governance metrics to the litigation expenses for the same 13 banking institutions. There are four main findings: First, litigation expenses of large banks have been on the decline since 2015; second, although the US banks incurred much greater litigation expenses during the 2010–2014 period, their litigation expenses have declined much more quickly than those of the European banks during the 2015–2017 period; third, litigation expenses incurred by European banks have been much higher than those of US banks when compared with bank total revenues and total capital; fourth, for US banks there is a strong correlation between improved corporate governance and lower litigation costs. However, for European banks it appears that the comply-or-explain approach to corporate governance muddies the link between good corporate governance and lower litigation costs.