R&D financing and growth
Luca Spinesi and
Mario Tirelli (mario.tirelli@uniroma3.it)
MPRA Paper from University Library of Munich, Germany
Abstract:
R&D investment are an important engine of growth and development. Yet economists have often claimed underinvestment, also due to the asymmetric information between inside investors and outside investors and financiers, and the consequent capital and financial market imperfections. Some recent empirical evidence robustly supports these claims. Motivated by this evidence, we study the effects of asymmetric information and financial frictions on R&D investment within a dynamic GE economy of Shumpeterian tradition. The model and equilibrium concept we propose is rich enough to represent investment and innovation decisions, financial decisions and decisions regarding technology adoption/diffusion through patent licensing. Qualitative predictions indicate that the financial policy of the firm matters in explaining both entrepreneurial production and innovation decisions. Young R&D-intensive firms might rely more heavily on internal sources and equity than on debt financing, relatively to what would otherwise be observed in absence of frictions. These findings contribute to explain the type of financial hierarchy recently highlighted in the empirical studies.
Keywords: Innovation; R&D; Shumpeterian growth; firm financial structure; asymmetric information; financial markets; general equilibrium. (search for similar items in EconPapers)
JEL-codes: D5 D53 D92 O31 O33 O34 O4 (search for similar items in EconPapers)
Date: 2018-04-30
New Economics Papers: this item is included in nep-cse, nep-ent, nep-fdg, nep-gro, nep-ino, nep-knm, nep-sbm and nep-tid
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https://mpra.ub.uni-muenchen.de/86860/9/MPRA_paper_86860.pdf original version (application/pdf)
Related works:
Journal Article: R&D financing and growth (2021)
Working Paper: R&D FINANCING AND GROWTH (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:86860
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