A Schumpeter-inspired approach to the construction of R&D capital stocks
Jürgen Bitzer () and
Andreas Stephan ()
Applied Economics, 2007, vol. 39, issue 2, 179-189
A new method for constructing R&D capital stocks is proposed and tested. Following Schumpeter, the development of R&D capital stocks is modelled as a process of creative destruction. Newly generated knowledge is assumed not only to add to the existing R&D capital stocks but also, by displacing old knowledge, to destroy part of that capital. This is in stark contrast to the perpetual inventory method, which postulates a constant rate of depreciation. We compare both methods by estimating the impact of R&D and spillovers on output of 9 industries in 12 OECD countries, and find that the new approach leads to more sensible and robust results.
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Working Paper: A Schumpeter-Inspired Approach to the Construction of R&D Capital Stocks (2002)
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