Back to Basics: Basic Research Spillovers, Innovation Policy and Growth

Ufuk Akcigit, Douglas Hanley and Nicolas Serrano-Velarde

No 11707, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper introduces a general equilibrium model of endogenous technical change through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard innovation policies (e.g., uniform R&D tax credits) can accentuate the dynamic misallocation in the economy by oversubsidizing applied research. Policies geared towards public basic research and its transmission to the private sector are significantly welfare improving.

Keywords: Productivity; Innovation; Basic research; Applied research; Research and development; Government spending; Endogenous growth; Spillover (search for similar items in EconPapers)
JEL-codes: J82 L25 L50 O31 O38 O40 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-cse, nep-fdg, nep-gro, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Related works:
Journal Article: Back to Basics: Basic Research Spillovers, Innovation Policy, and Growth (2021)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2013)
Working Paper: Back to Basics: Basic Research Spillovers, Innovation Policy and Growth (2012)
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