We show how a Schumpeterian process of creative destruction can induce rational, herd-behavior by entrepreneurs across diverse sectors of the economy that may look like it is fuelled by ``animal spirits''. Consequently, a multi-sector economy, in which sector-specific, productivity improvements...

A Schumpeterian process of creative destruction can induce a rational herd behavior by entrepreneurs across various sectors of the economy that may look like it is fuelled by "animal spirits." Across cyclical economies, a negative relationship emerges between volatility and growth, and the...