Back to Basics: Basic Research Spillovers, Innovation Policy, and Growth

Ufuk Akcigit, Douglas Hanley and Nicolas Serrano-Velarde

The Review of Economic Studies, 2021, vol. 88, issue 1, 1-43

Abstract: This article introduces a general equilibrium model of endogenous technical change through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that uniform research subsidies can accentuate the dynamic misallocation in the economy by oversubsidizing applied research. Policies geared towards public basic research and its interaction with the private sector are significantly welfare-improving.

Keywords: Productivity; Innovation; Basic research; Applied research; Research and development; Government spending; Endogenous growth; Spillover; J82; L25; L50; O31; O38; O40 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (52)

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Related works:
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2016)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:88:y:2021:i:1:p:1-43.

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