International R&D Spillovers and other Unobserved Common Spillovers and Shocks

Diego Ivan Ruge Leiva
Authors registered in the RePEc Author Service: Diego-Ivan Ruge-Leiva

MPRA Paper from University Library of Munich, Germany

Abstract: Studies which are based on Coe and Helpman (1995) and use weighted foreign R&D variables to estimate channel-specific R&D spillovers disregard the interaction between international R&D spillovers and other unobserved common spillovers and shocks. Using a panel of 50 economies from 1970-2011, we find that disregarding this interaction leads to inconsistent estimates whenever knowledge spillovers and other unobserved effects are correlated with foreign and domestic R&D. When this interaction is modeled, estimates are consistent; however, they confound foreign and domestic R&D effects with unobserved effects. Thus, the coefficient of a weighted foreign R&D variable cannot capture genuine channel-specific R&D spillovers.

Keywords: Productivity; Cross-Section Dependence; Unobserved Common Spillovers and Shocks. (search for similar items in EconPapers)
JEL-codes: C23 O11 O30 O40 (search for similar items in EconPapers)
Date: 2015-01-30
New Economics Papers: this item is included in nep-eff and nep-ino
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Related works:
Working Paper: International R&D Spillovers and other Unobserved Common Spillovers and Shocks (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:63500

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