A TIME SERIES TEST OF INNOVATION-DRIVEN ENDOGENOUS GROWTH

This article finds evidence that ideas and innovation are a key force explaining postwar growth in the U.S. economy. Utilizing data on patents issued since 1851, I construct a measure of the growth rate of knowledge. Capital stock estimates, human capital estimates, and real gross domestic product per worker growth rates are combined with the knowledge growth series to construct a time series test of endogenous innovation growth models. The results support the endogenous innovation approach but suggest that the accumulation of the per worker capital stock and changes in average human capital per worker are at least as important. (JEL 030 , C32 )