Business Cycles and the Dynamics of Innovation: a Theoretical Perspective

Manzoor Ahmad (), Zahoor Ul Haq and Shehzad Khan
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Zahoor Ul Haq: Pakhtunkhwa Economic Policy Research Institute (PEPRI), Faculty of Business and Economics, Abdul Wali Khan University Mardan
Shehzad Khan: Abdul Wali Khan University Mardan

Journal of the Knowledge Economy, 2024, vol. 15, issue 1, No 57, 1418-1436

Abstract: Abstract This paper constructs a simple dynamic growth model and deducts four theoretical predictions: prediction I, new knowledge creations and research and development expenditures (R&DE) contribute to economic upturns and downturns; prediction II, the R&DE and new knowledge creations upsurge and fall in the economic expansions and contractions periods, respectively; prediction III, the research intensity and frequency of new knowledge creations increase and reduce during boom and recession periods, respectively; prediction IV, positive and negative shocks in R&DE and new knowledge creation are caused by changes in consumption, saving, R&DE, and innovation activities during economic boom and slump periods; and prediction IV, innovation and gross domestic product have a bidirectional causal nexus during trade cycles.

Keywords: R&D expenditures; Technological innovation; Business cycles; Economic growth (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01155-6

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