Publications
G. Cozzi and S. Galli, forthcoming in "Handbook of Labor, Human Resources and Population Economics”, edited by K.F. Zimmermann
Thanks to Covid-19 vaccines, in high-income economies the social and economic conditions of our living environments quickly converged to pre-pandemic times. Anyway, the global fight against Covid-19 is not over as the accumulated delays in providing effective vaccine intervention in the low- and middle-income countries are ultimately responsible for the ongoing virus circulation at the global level and the proliferation of immunity-escaping SARS-Cov-2 variants.
For this reason, governmental rationality around the world would suggest any possible active policy tool to scale up vaccines supply; and the international scientific community amply supported the different proposals of a temporary patent waiver for Covid-19 vaccines as a tool to increase global supply, achieve global herd immunity, and advance global health equity. In fact, according to preliminary but influential scientific epidemiological evidence, through natural evolution, SARS-CoV-2 will likely continue spreading and shift to primary infection among younger age groups; with possible devastating long-term consequences for the economies of the developing countries at risk of chocking into poor-health-induced poverty traps. This likely scenario could substantially jeopardize the success achieved over the past twenty years by the Vaccine Alliance (GAVI) in reducing global vaccine inequality and preventing future outbreaks.
More than 100 countries have asked WTO to temporarily waive Covid-19-related patents, to stimulate the entry of more firms worldwide and rump-up vaccine production. The high-income economies blocked this proposal more times at the WTO. This reminded of the traditional poor-rich country opposition well-known in the pharmaceutical industry in the international political opposition to the application of the TRIPS, which let to the Doha Declaration, back in 2003.
In this chapter we extensively reviewed the available medical and economic literature on the subject, guiding the reader step-by-step to the leading scientific, political, and cultural challenges in granting broad worldwide access to vaccination.
We showed that governments can and should take an active role in supporting private R&D on new and better vaccines, while at the same time promoting the know-how transfer needed to guarantee a production booster and reach world herd immunity. The insights of this chapter on how to overcome knowledge transfer impediments will be also helpful for future pandemics.
G. Cozzi and S. Galli (2021), Economic Modelling, Volume 98, May 2021, Pages 179-191
Should knowledge creation be publicly or privately funded? This study investigated the shift in the U.S. innovation system towards the patentability and commercialization of the basic research that happened during the early 1980s. We interpreted this change as scientists and researchers becoming more responsive to “market” forces. Before 1980, universities researched by employing scientists motivated by “curiosity.” After 1980, scientists could patent their research and universities could behave as private firms. In the context of two-stage inventions (basic and applied research), this reform has a priori ambiguous effects on innovation and welfare. We built a Schumpeterian growth model and match it to the data to assess this critical turning point from the innovation and welfare perspectives.
Cozzi G. and S. Galli (2020), Economics Letters, Volume 189, April 2020
The most recent literature on unemployment and growth with nominal frictions and Schumpeterian creative destruction, pioneered by Benigno and Fornaro (Rev Ec Stud, 2018), embeds a tractable endogenous TFP growth mechanism that connects productivity gains to expected future innovators’ profits. Their model exhibits the following features: (i) productivity is driven by R&D investment; (ii) R&D investment level is determined by the forward-looking optimizing behaviour of innovators; (iii) price and wages dynamics are affected by nominal and real rigidities; (iv) stochastic shocks to fundamentals stochastically hit the economy.
In this article, we generalized Benigno and Fornaro’s (2018) approach to unemployment and growth. We showed how a simple-to-apply discrete time innovation process leads to a straightforward translation of the continuous time modelling into discrete time. This is potentially useful to microfound the generality of the Schumpeterian dynamic stochastic general equilibrium (DSGE) models.
Cozzi G. and S. Galli, Economics Letters, vol. 157, 2017 August, pages 122-124
Traditionally, basic research is mainly performed publicly. Yet in the US public research findings were not patentable until 1980, and in other countries are not yet patentable. Patentability renders public research more directed, with less potential waste, but it also restricts private applied research. This paper shows, by means of a multi-stage Schumpeterian growth model, that in the long run the first effect is bound to dominate.
G. Cozzi, N. Mantovan and S. Galli (2018), European Economic Review 109 (2018) 257–274
Mental health problems are very common and have a detrimental effect on personal income and the overall economy. However, psychotherapy can reduce the negative effects of mental health issues and increase productivity. To the best of our knowledge, this article presents the first theoretical and empirical study of the effects of consulting a psychotherapist on labor income. Moreover, our analysis shows gender differences both in the rate of help-seeking and in the returns generated by consulting a psychotherapist. If psychotherapy can mitigate the effects of mental health problems on productivity, it should have a substantial impact on personal income as well as on the whole economy.
Cozzi G. and S. Galli, Journal of Economic Growth 19, 183–219 (2014)
Focussing on the US experience, we studied the incentive of sequential innovators in the context of modern Schumpeterian growth, according to a stylized pre-Bayh-Dole Act (1980) scenario, and a post-Bayh-Dole Act (1980) scenario.
Over the course of about twenty years of court litigations following the application of the Bayh-Dole Act (1980-2002), the possibility of patenting basic research was gradually granted and extended to a broader and broader category of innovations. This period (1980-2002), often referred to as the pro-patent era, which culminated with the famous US Supreme Court decision on Madey v. Duke University of 2002. The Supreme Court decision favored the instances of the inventor, Dr. John M.J. Madey, against Duke University for the unlicensed use of a patented research tool for university teaching, as long as the use of the patented technology is proved to be related to the infringer’s main business (i.e., teaching for a university).
With this decision, the US Supreme Court radically upset the jurisprudential doctrine prevalent up to that moment, according to which universities and national research institutions, like the National Health Institute, were granted a generous research exemption regime from the patent law precisely given their contribution to the training of the new generations of scientists. We provided a new sequential innovation-based growth model with endogenous individuals' educational choices.
Moreover, since basic IPR protection is granted upon court decisions, we modeled a mathematical evolution of the common law itself. This significant modification allowed us to schematically replicate the observed changes in the skill premium, education, and strengthening of IPR in the US during the Eighties and Nineties of the XX century. This article contributed to explaining the well-known dynamics of the skill premium and education in the US, which motivated prominent theories of skill-biased technical change and directed technological change.
Chu A.C., G. Cozzi and S. Galli (2014), Journal of Development Economics 106 (2014) 239–249
This article is about optimal IPR in developing countries. Inspired by the Chinese experience, we developed a Schumpeterian growth model of distance to frontier in which economic growth in the developing country is driven by domestic innovation and imitation and transfer of foreign technologies through foreign direct investment. This paper showed that optimal IPR protection is stage-dependent: at an early stage of development, the country implements weak IPR protection to facilitate imitation. At a later stage of development, the government implements strong IPR protection to encourage domestic innovation. Finally, it provided a panel data analysis showing that empirical evidence robustly supports this theoretical finding.
Chu A.C., G. Cozzi and S. Galli (2012), European Economic Review, Vol. 56, Issue 4, 2012, 727-746.
To fully assess the desirability of increasing IPR for growth and welfare, one needs to consider an industrial organization framework rich enough to encompass both horizontal and vertical innovation. This allowed us to study the effects of backloading or frontloading profits to the incumbents or the new entrants of an industry. Our model suggests that strong IPR backloading profits to previous incumbents would reduce aggregate growth when calibrated to the US data. On the other hand, encouraging horizontal innovation would also generate many new varieties to increase US welfare.
Cozzi and S. Galli (2009), Scottish Journal of Political Economy, 56: 474-491
Innovation is the source of technological progress and, ultimately, the main driver of long-run economic growth. In this work, we analyzed the role played by outsider upstream innovators, either for-profit firms (technological start-ups) or curiosity-driven scientists in academic institutions, in the most successful national innovation systems (primarily the US). To this aim, we developed a new modeling toolkit to analyze the effects of basic research on economic growth and welfare. We investigated the black box of university- and publicly-run research institutions by studying the incentives and the mechanisms implemented to encourage the applicability of basic research and how these last may spur economic growth. Moreover, we showed that these mechanisms can have substantial general equilibrium consequences even if only social norms support them.