Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States

Viktor Slavtchev and Simon Wiederhold ()

American Economic Journal: Macroeconomics, 2016, vol. 8, issue 2, 45-84

Abstract: Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. In a theoretical model, we first show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private R&D. Using unique data on federal procurement in US states and performing panel fixed-effects estimations, we find support for the model's prediction of a positive R&D effect of the technological content of government procurement. Instrumental-variable estimations suggest a causal interpretation of our findings. (JEL H57, H76, O31, O32, O38)

JEL-codes: H57 H76 O31 O32 O38 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mac.20130069
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Citations: View citations in EconPapers (42)

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Working Paper: Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States (2014)
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