It wasn't pie-in-the-sky thinking that prompted the Nobel Prize-winning economist Edmund S. Phelps and the risk management adviser Leo M. Tilman to propose creating a First National Bank of Innovation. The Columbia University colleagues, who pitched the idea in the Harvard Business Review this week, see a real need for a game-changer to help the U.S. economy get back its edge.

Phelps and Tilman envision a government-sponsored enterprise that could raise cheap money and funnel it to innovative projects vetted by lending and investment officers from a network of banks. Think of it as a cross between the Farm Credit System and a venture capital firm, generating enough economic dynamism from areas such as clean energy and nanotechnology to propel the country.

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