R&D, demand fluctuations and credit constraints: comparative evidence from Europe

Kadri M�nnasoo () and Jaanika Meriküll

No wp2011-05, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This paper contributes to the literature by investigating whether the cyclicality of R&D differs across countries with different levels of development. The paper uses micro-data from the World Bank/EBRD Business Environment and Enterprise Performance survey from 2001- 2007 and estimates bivariate probit model of firms' R&D conditioned on credit constraints. The main results are: (1) The likelihood of a firm conducting R&D increases with sales growth and decreases with credit constraints. (2) R&D by firms is counter-cyclical to exogenous industry output and a negative industry demand shock has a stronger countercyclical effect on R&D than a positive industry demand shock does. (3) R&D is more counter-cyclical to demand shocks the further the country is from the technological frontier

Keywords: R&D cyclicality; demand fluctuations; credit constraints; comparative study (search for similar items in EconPapers)
JEL-codes: E32 G31 O30 O52 (search for similar items in EconPapers)
Date: 2011-05-13, Revised 2011-05-13
New Economics Papers: this item is included in nep-ino and nep-sbm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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