Do Spillovers Matter When Estimating Private Returns to R&D?

Markus Eberhardt, Christian Helmers () and Hubert Strauss
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Hubert Strauss: European Investment Bank

The Review of Economics and Statistics, 2013, vol. 95, issue 2, 436-448

Abstract: A large body of literature estimates private returns to R&D adopting the Griliches knowledge production framework, which ignores the potential impact of spillovers on consistent estimation. Using a panel of twelve manufacturing industries across ten OECD economies, we investigate whether ignoring spillovers leads to bias in the estimated private returns to R&D. We compare results from a common factor framework, which accounts for spillovers and other unobserved shocks, to those from a standard Griliches approach. Our findings confirm that conventional estimates conflate own-R&D and spillover effects, implying that spillovers cannot be ignored even when the interest lies exclusively in evaluating private returns to R&D. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: productivity; R&D; spillovers; common factor model (search for similar items in EconPapers)
JEL-codes: C23 D24 L16 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (183)

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Related works:
Working Paper: Do Spillovers Matter When Estimating Private Returns to R&D? (2011)
Working Paper: Do spillovers matter when estimating private returns to R&D? (2010)
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