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In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. We find that a country's basic-research investments...
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This short paper extends the analysis of Morgan and Tumlinson (2018) to the setting of a small open economy. We show that in this economy featuring endogenous free entry of firms: (1) Both the number and production of firms is socially optimal. Furthermore production is efficient --- it...
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