The Long-Run Growth Effects of R&D Subsidies

Paul Segerstrom

No 506, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper presents a model of R&D-driven growth without scale effects where firms can engage in both horizontal and vertical R&D activities. Unlike in earlier models of R&D-driven growth without scale effects by Jones (1995), Segerstrom (1998) and Young (1998), R&D subsidies can have long-run growth effects. Indeed, for a wide range of parameter values, a permanent increase in the R&D subsidy rate decreases the long-run rate of economic growth. An intuitive explanation for why R&D subsidies sometimes retard growth and sometimes promote growth is provided.

Keywords: Economic growth; R&D (search for similar items in EconPapers)
JEL-codes: O32 O41 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1998-11-05
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Long-Run Growth Effects of R&D Subsidies (2000)
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