Further considerations on the link between adjustment costs and the productivity of R&D investment: evidence for Spain

Desiderio Romero-Jordan (), Jose Felix Sanz-Sanz and Inmaculada Álvarez

Applied Economics Letters, 2009, vol. 16, issue 14, 1471-1476

Abstract: This article constructs a dynamic model to estimate the impact of adjustment costs on the productivity of investment in R&D. In order to take into account the possible endogeneity of adjustment costs, the model is estimated by means of instrumental variables (IV), using a panel of Spanish companies. The results show that the elasticity of the productivity of R&D investment with regard to adjustment costs is high, with a value close to -1 (-0.96). This confirms that it is essential to include adjustment costs in the empirical analysis of R&D productivity, as suggested by Jones and Williams (1998) and Comin (2002, 2004).

Date: 2009
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DOI: 10.1080/13504850701564322

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