The Cyclical and Nonlinear Impact of R&D and Innovation Activities on Economic Growth in OECD Economies: a New Perspective

Manzoor Ahmad () and Jianghuai Zheng
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Jianghuai Zheng: Nanjing University

Journal of the Knowledge Economy, 2023, vol. 14, issue 1, No 24, 544-593

Abstract: Abstract This study empirically tested the cyclical and nonlinear nexus between innovation and economic growth using simultaneous equation modeling approach for thirty-six OECD economies. Some of the key findings on the cyclical innovation-growth nexus are as follows. First, results indicated that a positive shock to R&D expenditures (R&DE) and patents was positively connected with economic growth in the boom period. Second, in the recession period, a negative shock to R&DE and patents was negatively linked with economic growth. Third, the estimated results suggested that positive shocks to R&DE and patents have a more significant and positive impact on economic growth than the negative shock to R&DE and patents. Fourth, a positive shock to patents has a greater positive impact on economic growth than the impact of a negative shock to patents on economic growth. Fifth, the findings showed that the nexus between R&DE, patents, and economic growth was pro-cyclical among OECD countries.

Keywords: Business cycles; Innovation shocks; Economic growth; R&D expenditures (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s13132-021-00887-7

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