EconPapers    
Economics at your fingertips  
 

Uncertainty and the Dynamics of R&D

Nicholas Bloom ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Uncertainty varies strongly over time, rising by 50% to 100% in recessions and by up to 200% after major economic and political shocks. This paper shows that higher uncertainty reduces the responsiveness of R&D to changes in business conditions - a "caution-effect" - making it more persistent over time. Thus, uncertainty will play a critical role in shaping the dynamics of R&D through the business cycle, and its response to technology policy. I also show that if firms are increasing their level of R&D then the effect of uncertainty will be negative, while if firms are reducing R&D then the effect of uncertainty will be positive.

Keywords: R&D; uncertainty; real options (search for similar items in EconPapers)
JEL-codes: D92 D8 O3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino
Date: 2007-05
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (32) Track citations by RSS feed

Downloads: (external link)
http://cep.lse.ac.uk/pubs/download/dp0792.pdf (application/pdf)

Related works:
Journal Article: Uncertainty and the Dynamics of R&D (2007) Downloads
Working Paper: Uncertainty and the dynamics of R&D (2007) Downloads
Working Paper: Uncertainty and the Dynamics of R&D (2007) Downloads
Working Paper: Uncertainty and the Dynamics of R&D (2007) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0792

Access Statistics for this paper

More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Series data maintained by ().

 
Page updated 2017-10-06
Handle: RePEc:cep:cepdps:dp0792