Simultaneous Innovation and the Cyclicality of R&D
Miroslav Gabrovski ()
No 201813, Working Papers from University of Hawaii at Manoa, Department of Economics
There is ample evidence that R&D investment is mildly pro-cyclical. Whereas the existing literature can explain the positive correlation between investment in R&D and output, the moderate strength of the relationship remains under-explored. This paper develops a stochastic expanding-variety endogenous growth model that accounts for the observed mild pro-cyclicality of R&D. In the model, several firms may simultaneously make the same innovation. Research projects innovated by many firms simultaneously are of higher quality, on average, and contribute relatively more to the expansion of the knowledge stock in the economy. This delivers an endogenous mechanism that breaks the otherwise perfect correlation between R&D and output. A calibration of our model closely matches the cyclical properties of R&D.
Keywords: Simultaneous Innovation; Research and Development; Medium-Term Cycles; Macroeconomic Fluctuations; Endogenous Cycles (search for similar items in EconPapers)
JEL-codes: O30 O40 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino, nep-mac, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_18-13.pdf First version, 2018 (application/pdf)
Journal Article: Simultaneous Innovation and the Cyclicality of R&D
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hai:wpaper:201813
Ordering information: This working paper can be ordered from
http://www.economics ... esearch/working.html
Access Statistics for this paper
More papers in Working Papers from University of Hawaii at Manoa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Web Technician ().