Effects of Public and Private R&D on Private-Sector Performance in the United States

Robert B. Archibald and Alfredo Pereira

Public Finance Review, 2003, vol. 31, issue 4, 429-451

Abstract: This study analyzes the effects of public and private research and development (R&D) on private-sector output, employment, and investment using a multivariate time-series approach. This approach follows the conceptual argument that dynamic feedbacks are essential to understanding the relationship between public-funded R&D and private-sector performance. With this approach, the authors are able to measure the total effects of public and private R&D on private output. The results suggest that in the long term, public R&D does not affect employment but crowds in private investment, whereas private R&D is a substitute for both. As a consequence, the long-term effects of public R&D on output are positive and substantial, whereas the effects of private R&D are at best marginally positive. As a corollary, the authors argue that public R&D should be brought into the limelight as a leading candidate for explaining the growth slowdown in the past decades.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:31:y:2003:i:4:p:429-451

DOI: 10.1177/1091142103031004005

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