Subsidising Innovation over the Business Cycle

Isabel Busom () and Jorge Vélez-Ospina ()
Additional contact information
Jorge Vélez-Ospina: Science Policy Research Unit (SPRU), University of Sussex.
Authors registered in the RePEc Author Service: Jorge Andres Velez-Ospina

SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School

Abstract: We investigate whether the impact of direct support for business investment in R&D and innovation varies over the business cycle. We study whether firms that obtain public support in a recession differ from firms that obtain it during expansions; whether the impact of support is smaller in recessions than in expansions, and whether effects vary with the treatment pattern. Using firm-level data from Spain during the period 2005 to 2014, we combine propensity score matching and difference-in-differences methods to estimate firms’ response. We find that (i) while the impact of support on monetary investment in innovation is pro-cyclical, it is counter-cyclical in terms of the employee-time allocation to innovation activities; (ii) the additionality of a one-year treatment is smaller than that of a longer treatment. Direct public support may have thus prevented a decline of the firms’ knowledge capital during the recessi

Keywords: — R&D subsidies; policy evaluation; business cycle; additionali (search for similar items in EconPapers)
JEL-codes: C14 C21 D22 H L29 L53 O25 O38 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.sussex.ac.uk/webteam/gateway/file.php?name=distribution.pdf&site=25 (application/pdf)

Related works:
Journal Article: Subsidising innovation over the business cycle (2021)
Working Paper: Subsidizing Innovation Over the Business Cycle (2020)
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:sru:ssewps:2020-09

Access Statistics for this paper

More papers in SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School Contact information at EDIRC.
Bibliographic data for series maintained by University of Sussex Business School Communications Team ().