Acemoglu on Growth and Innovation

Daron Acemoglu, whom I identified here as one of the leaders of innovation economics, has written a paper titled The Crisis of 2008: Structural Lessons for and From Economics. It’s being widely quoted and criticized. Mark Thoma has a post titled Acemoglu: The Models are Broken. Arnold Kling likes Acemoglu’s essay, calling it “highly recommended”. But Yves Smith calls the analysis in the essay “shallow and profession serving”.

I’m going to focus on a different part of the Acemoglu essay than these commentators. I’m going to focus on his analysis of growth and innovation, as it relates to the crisis. Acemoglu writes: