 The Causality Between R&D And InvestmentEconomics of Innovation and New Technology, 2000, vol. 9, issue 4, 385-399 Abstract: The aim of this paper is to investigate the relationship between R&D expenditure and investment in machinery and equipment in order to test for causality. New growth theory emphasises the role of R&D in creating blueprints needed to produce new capital goods implicitly assuming causality running from R&D to investment. Other recent studies using firm level data have investigated the relationship between innovative activity and investment in fixed capital. In this paper we use aggregate data from the US economy on R&D expenditure in the industrial sector and aggregate investment in machinery and equipment. Standard Granger causality tests, together with the Hsiao version, are then performed, showing that causality runs from R&D to investment. In addition we perform a cointegration analysis allowing a test of possible long-run feedbacks. This dynamic representation shows that any feedback between investment and R&D is only significant in the long run. Keywords: Investment, R&D, Granger Causality, Cointegration, JEL classification: O30; O40; C22, (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:9:y:2000:i:4:p:385-399 Ordering information: This journal article can be ordered from DOI: 10.1080/10438590000000015 Access Statistics for this article Economics of Innovation and New Technology is currently edited by Professor Cristiano Antonelli More articles in Economics of Innovation and New Technology from Taylor & Francis Journals |
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