Financial Development, Econmic Growth and R&D Cyclical Movement

Ka Wai Terence Fung and Chi Keung Lau

MPRA Paper from University Library of Munich, Germany

Abstract: This paper builds up an endogenous growth model à la Aghion and Howitt (1992) and Boucekkine et al (2005). We assume that R&D firms use only investment good as input, instead of final good as hypothesized in the above two models. We show that investment price will be a negative function of aggregate quality index; and thus decline over time. In this model, subsidy on R&D has growth-enhancing effect. Moreover, this model predicts unambiguously that R&D is procyclical.

Keywords: Endogeneous growth model; real business cycle; research and development (search for similar items in EconPapers)
JEL-codes: E30 O3 O4 O40 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-dge, nep-gro, nep-ino and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52567

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