In this note, we develop a monetary Schumpeterian growth model to explore the e¤ects of monetary policy on endogenous market structure, economic growth and social welfare. We …nd that an increase in the nominal interest rate reduces the equilibrium number of …rms. Although long-run economic growth is independent of the nominal interest rate due to a scale-invariant property of the model, a higher nominal interest rate leads to lower growth rates of innovation, output and consumption during the transition path. Taking into account transition dynamics, we …nd that social welfare is decreasing in the nominal interest rate; therefore, Friedman rule is socially optimal in this economy.JEL classi…cation: O30, O40, E41

This study explores the di¤erent implications of patent breadth and R&D subsidies on economic growth and endogenous market structure in a Schumpeterian growth model. We …nd that when the number of …rms is …xed in the short run, patent breadth and R&D subsidies serve to increase economic growth as in previous studies. However, when the number of …rms adjusts endogenously in the long run, R&D subsidies increase economic growth but decrease the number of …rms, whereas patent breadth expands the number of …rms but reduces economic growth. Therefore, R&D subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating long-run economic growth.JEL classi…cation: O30, O40

This article investigates the macroeconomic effects of unionization in a Schumpeterian growth model with an endogenous product market structure and a unionized labor market. The endogeneity of the market structure and the trade unionism of the labor market interact and jointly determine the equilibrium unemployment, firm size, number of firms, economic growth, and distribution of income between workers and firms. We show that unionization governs the distribution of income between workers and firms and the unemployment rate, but it does not give rise to any growth effect on the economy. In addition, unionization discourages potential entrants and hence decreases the equilibrium number of firms. These results echo the empirical observation in the sense that unionization raises unemployment and alters the distribution of income between workers and firms, but it does not give rise to a significant, real impact on the firms investment and the economy-wide growth. It should be noted that as argued by Freeman (2007), this evidence has recently turned out to be fragile. The unemployment effect of collective bargaining appears to be contingent upon other institutional and policy factors that need to be clarified to provide robust policy advice. The estimated coefficients on labor institutions become statistically insignificant with modest changes in the measures of institutions, countries covered, and time period. Models that cover more years, countries, and measures than the early studies provide little support for those who advocate the conventional deregulation of labor markets (Baker et al., 2005). This valuable information was provided to us by an anonymous referee, to whom we are grateful.