Essays on technological innovation, capital investment and economic growth

This thesis consists of three chapters on technological innovation, capital investment and economic growth. The first chapter studies the effects of Hurricane Katrina — the costliest storm in U.S. history — on inventors' innovation outcomes, particularly green innovation which helps combat climate change. Using hazard and patent data for U.S. inventors in a difference-in-differences framework, I find Katrina significantly reduced inventors' green patent production, leaving non-green patents unaffected. Specifically, affected inventors could have produced 24.6% more green patents within a three-year period after 2005, had Katrina not occurred. The negative effects are more pronounced for patent output with greater knowledge diversity and for inventors who had collaborated with more technologically distant peers prior to the disaster. These findings suggest that knowledge diversity may compromise the resilience of technological development in the face of disruption. The second chapter investigates how checks and balances impact corporate investment. Exploiting shifts between unified and divided U.S. government resulting from presidential and congressional elections, I find that firms reduce investment rates by an average of 13.9% under unified governments relative to divided governments. The effect is stronger for firms reliant on government contracts, operating in less competitive markets, and facing greater investment irreversibility, supporting the hypothesis that unified governments introduce higher political uncertainty due to their greater legislative power. This implies that divided governments, by providing political balance, may foster economic growth through a more stable investment environment. Chapter three explores how state leaders' political party affiliations affect economic growth in the U.S., using a regression discontinuity design around close gubernatorial elections. Republican governors significantly boost short-term state real GDP per capita and real GDP growth by 2.0 and 2.6 percentage points annually, respectively. These results highlight the significant role of elected leaders’ political affiliations in shaping economic outcomes in a democratic society.