The Dynamics of R&D and Innovation in the Short-Run and in the Long-RunLaura Bottazzi () and Giovanni Peri () No 4479, CEPR Discussion Papers from C.E.P.R. Discussion Papers Abstract: In this Paper we estimate the dynamic relationship between resources used in R&D by some OECD countries and their innovation output as measured by patent applications. We first estimate a long-run cointegration relation using recently developed tests and panel estimation techniques. We find that the stock of knowledge of a country, it’s R&D resources and the stock of international knowledge move together in the long run. Then, imposing this long-run relation across variables we analyse the impulse response of new ideas to a shock to R&D or to a shock to innovation by estimating an error correction mechanism. We find that internationally generated ideas have a very significant impact in helping innovation in a country. As a consequence, a positive shock to innovation in a large country as the US has, both in the short and in the long run, a significant positive effect on the innovation of all other countries. Keywords: error correction mechanism; innovation; international R&D spillovers; panel cointegration (search for similar items in EconPapers) Downloads: (external link) Related works: Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers |
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