Do Business Cycles Alter the Composition of Research and Development Expenditures?

Matthew Rafferty

Contemporary Economic Policy, 2003, vol. 21, issue 3, 394-405

Abstract: Do business cycles cause firms to alter the composition of research and development (R&D) expenditures? This article uses aggregate data on U.S. firm‐financed R&D expenditures during the 1956–96 period to address this issue. The mix of R&D expenditures changes over the business cycles with firms increasing the amount of basic R&D and reducing the amount of development R&D during recessions. Though the effects are small, the results raise the possibility that business cycles influence the rate of long‐run growth. (JEL E33, O30)

Date: 2003
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