Technological Waves, Knowledge Diffusion, and Local Growth

We develop a spatial model of endogenous growth with frictional knowledge diffusion to examine the effect of technological waves—defined as long-term shifts in the importance of specific knowledge fields—on local growth dynamics. We calibrate the model using a new dataset of historical geolocated patents spanning over 100 years. We find that frictions to idea diffusion across locations and technological fields account for two-thirds of the empirical relationship between exposure to technological waves and local growth in the United States during the twentieth century. Counterfactual experiments suggest that future changes in the technological landscape may have substantial geographical effects.