Economic Growth through Diversity in Beliefs
-
Series
-
Speaker(s)Christian Heyerdahl-Larsen (BI Norwegian Business School, Norway)
-
FieldFinance, Accounting and Finance
-
LocationTinbergen Institute Amsterdam, room 1.01
Amsterdam -
Date and time
October 30, 2024
12:45 - 14:00
Abstract
We study a macro-finance model with entrepreneurs who have different views on identifying the “next big idea,” leading them to pursue distinctly different paths. Their different views and consequent engagement in a broad array of strategies and actions serve to tap into the full spectrum of societal ideas, thereby fostering economic growth that would be unattainable without such diversity. The resulting benefits for future generations come at the cost of higher wealth and consumption inequality. Venture capital funds and taxes enhance risk sharing among entrepreneurs, stimulating innovation and growth unless high taxes deplete entrepreneurial capital.