Boyan Jovanovic
Biographic Data
| ID | 5736112 |
|---|---|
| NAME | Boyan Jovanovic |
| GIVEN NAMES | Boyan |
| FAMILY NAME | Jovanovic |
| SIGNATURE | JOVANOVIĆ B |
| AFFILIATIONS | New York University |
| VERIFIED | No |
| TOTAL WORKS | 20 |
| TOTAL CITATIONS | 697 |
| AUTHOR COUNT | 20 |
| EDITOR COUNT | 0 |
| FIRST PUBLICATION YEAR | 1979 |
| LATEST PUBLICATION YEAR | 2025 |
| H-INDEX | 6 |
Robert Lucas’s Models of Firm Size Distributions and Investment
Equilibrium Bid-Price Dispersion
If bidding in a pure common-value auction is costly and bidders do not know how many others are also bidding, all equilibria are in mixed strategies. Participation is probabilistic, and bid prices are dispersed. The symmetric equilibrium is unique and yields simple analytic expressions. We use them to, for example, show that bid prices exhibit negative skew-ness. The expressions are further used to estimate the model based on bidding on a Standar…
The entrepreneurship premium
Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents. The paper also shows that in an otherwise standard occupational choice setting, the entrepreneurship premium rises with entreprene…
Extensive and Intensive Investment over the Business Cycle
Investment of US firms responds asymmetrically to Tobin’s Q: investment of established firms—“intensive” investment—reacts negatively to Q whereas investment of new firms—“extensive” investment—responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces …
On the Market for Venture Capital
We propose a theory of the market for venture capital that links the excess return to venture equity to the scarcity of venture capitalists (VCs). High returns make the VCs more selective and eager to terminate nonperforming ventures because they can move on to new ones. The scarcity of VCs enables them to internalize their social value, and the competitive equilibrium is socially optimal. Moreover, the bilaterally efficient contract is a simple …
Mergers as Reallocation
We model merger waves as reallocation waves, and argue that mergers spread new technology in a way that is similar to that of the entry and exit of firms. We focus on two periods: 1890–1930, during which electricity and the internal combustion engine spread through the U.S. economy, and 1970–2000—the Information Age. As the model implies, reallocation did rise during both epochs. The model also implies that exits should lead mergers during a tran…
Contracts and Money
Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, the authors find that, when price-level data are gathered with delay, these contracts are not renegotiation-proof. The contracts that replace them entail a lower level of welfare for the parties to that contract. They also imply that real variables respond to nominal shocks. Copyright 1997 by the University of Chicago
Firm formation with heterogeneous management and labor skills
Competitive Diffusion
This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and force…
The Life Cycle of a Competitive Industry
Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. Copyrig…
An Estimate of a Sectoral Model of Labor Mobility
This paper develops a model of sectoral labor mobility and tests its main implications. The model nests two distinct hypotheses on the origin of mobility: (1) sectoral shocks and (2) worker-employer mismatch. We estimate the relative importance of each hypothesis and find that the bulk of labor mobility is caused by mismatch rather than by sectoral shift. We then try to put a value on society's match--specific information. That is, we ask to what…
Financial Development, Growth, and the Distribution of Income
A paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined. Financial intermediation promotes growth because it allows a higher rate of return to be earned on capital, and growth in turn provides the means to implement costly financial structures. This financial intermediation and economic growth are inextricably linked in accord with the Goldsmith-McKinnon-Shaw view on…
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
Is the capitalist function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Frank H. Knight and Joseph A. Schumpeter held different views on the answer to this question. The authors' empirical findings side with Knight: liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: t…
The Efficiency of Search under Competition and Monopsony
This paper compares monopsonistic and competitive search equilibria. While the competitive equilibrium is efficient, the monopsonistic equilibrium is not: there is too much search, and the employment rate is too low
Matching, Turnover, and Unemployment
This paper develops the view that workers move into and out of the labor market because of changes in the perceived value of their market opportunities. A search model is combined with a matching model to yield movement of workers from job to job and into and out of employment
Selection and the Evolution of Industry
Recent evidence shows that within an industry, smaller firms grow faster and are more likely to fail than large firms. This paper provides a theory of selection with incomplete information that is consistent with these and other findings. Firms learn about their efficiency as they operate in the industry. The efficient grow and survive; the inefficient decline and fail. A perfect foresight equilibrium is proved by means of showing that it is a un…
Inflation and Welfare in the Steady State
This is a paper on expected inflation and welfare in steady-state equilibrium. The demand for money is an inventory demand with an endogenous payment period--the Clower constraint is not imposed. Higher inflation reduces welfare by reducing consumption, as people devote more of their real income to maintaining lower average money holdings. High inflation does not necessarily promote an increase in the capital stock--the Mundell-Tobin effect is ab…
Optimal International Reserves: A Stochastic Framework
Firm-specific Capital and Turnover
This is a model of permanent job separations when there are endogenous firm-specific human capital and intensity of on-the-job search. The result is a combination of human-capital theory with the theory of search turnover and search unemployment. An interesting technical twist is that the worker's decision problem under uncertainty is solved by means of the deterministic maximum principle
Job Matching and the Theory of Turnover
A long-run equilibrium theory of turnover is presented and is shown to explain the important regularities that have been observed by empirical investigators. A worker's productivity in a particular job is not known ex ante and becomes known more precisely as the worker's job tenure increases. Turnover is generated by the existence of a nondegenerate distribution of the worker's productivity across different. The nondegeneracy is caused by the ass…
Job Matching and the Theory of Turnover
A long-run equilibrium theory of turnover is presented and is shown to explain the important regularities that have been observed by empirical investigators. A worker's productivity in a particular job is not known ex ante and becomes known more precisely as the worker's job tenure increases. Turnover is generated by the existence of a nondegenerate distribution of the worker's productivity across different. The nondegeneracy is caused by the ass…
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
Is the capitalist function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Frank H. Knight and Joseph A. Schumpeter held different views on the answer to this question. The authors' empirical findings side with Knight: liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: t…
Financial Development, Growth, and the Distribution of Income
A paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined. Financial intermediation promotes growth because it allows a higher rate of return to be earned on capital, and growth in turn provides the means to implement costly financial structures. This financial intermediation and economic growth are inextricably linked in accord with the Goldsmith-McKinnon-Shaw view on…
Firm-specific Capital and Turnover
This is a model of permanent job separations when there are endogenous firm-specific human capital and intensity of on-the-job search. The result is a combination of human-capital theory with the theory of search turnover and search unemployment. An interesting technical twist is that the worker's decision problem under uncertainty is solved by means of the deterministic maximum principle
Matching, Turnover, and Unemployment
This paper develops the view that workers move into and out of the labor market because of changes in the perceived value of their market opportunities. A search model is combined with a matching model to yield movement of workers from job to job and into and out of employment
The Life Cycle of a Competitive Industry
Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. Copyrig…
Competitive Diffusion
This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and force…
Optimal International Reserves: A Stochastic Framework
On the Market for Venture Capital
We propose a theory of the market for venture capital that links the excess return to venture equity to the scarcity of venture capitalists (VCs). High returns make the VCs more selective and eager to terminate nonperforming ventures because they can move on to new ones. The scarcity of VCs enables them to internalize their social value, and the competitive equilibrium is socially optimal. Moreover, the bilaterally efficient contract is a simple …
Contracts and Money
Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, the authors find that, when price-level data are gathered with delay, these contracts are not renegotiation-proof. The contracts that replace them entail a lower level of welfare for the parties to that contract. They also imply that real variables respond to nominal shocks. Copyright 1997 by the University of Chicago
The Efficiency of Search under Competition and Monopsony
This paper compares monopsonistic and competitive search equilibria. While the competitive equilibrium is efficient, the monopsonistic equilibrium is not: there is too much search, and the employment rate is too low
Inflation and Welfare in the Steady State
This is a paper on expected inflation and welfare in steady-state equilibrium. The demand for money is an inventory demand with an endogenous payment period--the Clower constraint is not imposed. Higher inflation reduces welfare by reducing consumption, as people devote more of their real income to maintaining lower average money holdings. High inflation does not necessarily promote an increase in the capital stock--the Mundell-Tobin effect is ab…
Firm-specific Capital and Turnover
This is a model of permanent job separations when there are endogenous firm-specific human capital and intensity of on-the-job search. The result is a combination of human-capital theory with the theory of search turnover and search unemployment. An interesting technical twist is that the worker's decision problem under uncertainty is solved by means of the deterministic maximum principle
Job Matching and the Theory of Turnover
A long-run equilibrium theory of turnover is presented and is shown to explain the important regularities that have been observed by empirical investigators. A worker's productivity in a particular job is not known ex ante and becomes known more precisely as the worker's job tenure increases. Turnover is generated by the existence of a nondegenerate distribution of the worker's productivity across different. The nondegeneracy is caused by the ass…
Optimal International Reserves: A Stochastic Framework
Selection and the Evolution of Industry
Recent evidence shows that within an industry, smaller firms grow faster and are more likely to fail than large firms. This paper provides a theory of selection with incomplete information that is consistent with these and other findings. Firms learn about their efficiency as they operate in the industry. The efficient grow and survive; the inefficient decline and fail. A perfect foresight equilibrium is proved by means of showing that it is a un…
Inflation and Welfare in the Steady State
This is a paper on expected inflation and welfare in steady-state equilibrium. The demand for money is an inventory demand with an endogenous payment period--the Clower constraint is not imposed. Higher inflation reduces welfare by reducing consumption, as people devote more of their real income to maintaining lower average money holdings. High inflation does not necessarily promote an increase in the capital stock--the Mundell-Tobin effect is ab…
Matching, Turnover, and Unemployment
This paper develops the view that workers move into and out of the labor market because of changes in the perceived value of their market opportunities. A search model is combined with a matching model to yield movement of workers from job to job and into and out of employment
The Efficiency of Search under Competition and Monopsony
This paper compares monopsonistic and competitive search equilibria. While the competitive equilibrium is efficient, the monopsonistic equilibrium is not: there is too much search, and the employment rate is too low
An Estimated Model of Entrepreneurial Choice under Liquidity Constraints
Is the capitalist function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Frank H. Knight and Joseph A. Schumpeter held different views on the answer to this question. The authors' empirical findings side with Knight: liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: t…
An Estimate of a Sectoral Model of Labor Mobility
This paper develops a model of sectoral labor mobility and tests its main implications. The model nests two distinct hypotheses on the origin of mobility: (1) sectoral shocks and (2) worker-employer mismatch. We estimate the relative importance of each hypothesis and find that the bulk of labor mobility is caused by mismatch rather than by sectoral shift. We then try to put a value on society's match--specific information. That is, we ask to what…
Financial Development, Growth, and the Distribution of Income
A paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined. Financial intermediation promotes growth because it allows a higher rate of return to be earned on capital, and growth in turn provides the means to implement costly financial structures. This financial intermediation and economic growth are inextricably linked in accord with the Goldsmith-McKinnon-Shaw view on…
Firm formation with heterogeneous management and labor skills
Competitive Diffusion
This paper studies the evolution of a competitive industry in which a fixed number of firms reduce costs by innovating and by imitating their rivals' technologies. As the firms' technologies gradually improve, industry output expands and price falls. Technological leaders tend to rely on innovations to reduce their costs, whereas the laggards rely more on imitation. Imitation causes technology to spread from the leaders to the followers and force…
The Life Cycle of a Competitive Industry
Firm numbers first rise, then later fall, as an industry evolves. This nonmonotonicity is explained using a competitive model in which innovation opportunities fuel entry and relative failure to innovate prompts exit; equilibrium time paths for price and quantity also share features of the data. The model is estimated using data from the U.S. automobile tire industry, a particularly dramatic example of the nonmonotonicity in firm numbers. Copyrig…
Contracts and Money
Why are contracts not fully indexed? In a setting in which fully indexed contracts are feasible, the authors find that, when price-level data are gathered with delay, these contracts are not renegotiation-proof. The contracts that replace them entail a lower level of welfare for the parties to that contract. They also imply that real variables respond to nominal shocks. Copyright 1997 by the University of Chicago
Mergers as Reallocation
We model merger waves as reallocation waves, and argue that mergers spread new technology in a way that is similar to that of the entry and exit of firms. We focus on two periods: 1890–1930, during which electricity and the internal combustion engine spread through the U.S. economy, and 1970–2000—the Information Age. As the model implies, reallocation did rise during both epochs. The model also implies that exits should lead mergers during a tran…
On the Market for Venture Capital
We propose a theory of the market for venture capital that links the excess return to venture equity to the scarcity of venture capitalists (VCs). High returns make the VCs more selective and eager to terminate nonperforming ventures because they can move on to new ones. The scarcity of VCs enables them to internalize their social value, and the competitive equilibrium is socially optimal. Moreover, the bilaterally efficient contract is a simple …
Extensive and Intensive Investment over the Business Cycle
Investment of US firms responds asymmetrically to Tobin’s Q: investment of established firms—“intensive” investment—reacts negatively to Q whereas investment of new firms—“extensive” investment—responds positively and elastically to Q. This asymmetry, we argue, reflects a difference between established and new firms in the cost of adopting new technologies. A fall in the compatibility of new capital with old capital raises measured Q and reduces …
The entrepreneurship premium
Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents. The paper also shows that in an otherwise standard occupational choice setting, the entrepreneurship premium rises with entreprene…
Equilibrium Bid-Price Dispersion
If bidding in a pure common-value auction is costly and bidders do not know how many others are also bidding, all equilibria are in mixed strategies. Participation is probabilistic, and bid prices are dispersed. The symmetric equilibrium is unique and yields simple analytic expressions. We use them to, for example, show that bid prices exhibit negative skew-ness. The expressions are further used to estimate the model based on bidding on a Standar…
Robert Lucas’s Models of Firm Size Distributions and Investment
Economics (20 works) · Economic theories and models (13 works) · Firm Innovation and Growth (9 works) · Business (7 works) · Economic Growth and Productivity (7 works) · Microeconomics (7 works) · Finance (6 works) · Labour economics (6 works) · Monetary economics (6 works) · Finance (5 works)