Matsuyama, Kiminori; Sushko, Iryna; Gardini, Laura - Action IS1104 "The EU in the new complex geography of … - 2015
We propose and analyze a two-country model of endogenous innovation cycles. In autarky, innovation fluctuations in the two countries are decoupled. As the trade costs fall and intra-industry trade rises, they become synchronized. This is because globalization leads to the alignment of innovation...