Top Firms Hurt Economy by Hoarding Know-How: Jackson Hole Paper

The slowdown in productivity growth in the U.S. in recent decades may be linked to a decline in the rate at which knowledge from new innovations is diffused between companies, according to a new paper presented Thursday at the Federal Reserve’s annual Jackson Hole conference.

“A decline in knowledge diffusion, which allows laggard firms to learn from and implement the practices of the frontier firms, has potentially obstructed rivals from exerting enough competitive pressure on the frontier firms, leading dynamically to a decline in leaders’ incentives to experiment and innovate,” Ufuk Akcigit, an economist at the University of Chicago, and Sina Ates, an economist at the Fed, say in the paper.