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Public R&D Investment in Economic Crises

Maikel Pellens (), Bettina Peters (), Martin Hud, Christian Rammer and Georg Licht

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: We study the cyclicality of public R&D in 28 OECD countries (1995 - 2017). While procyclical on average, public R&D reacts asymmetrically over different phases of the business cycle and becomes acyclical during recessions. It is also heterogeneous across countries: Innovation leaders and followers behave countercyclically during recessions while moderate innovators behave procyclically. Furthermore, the share of public R&D allocated to the business sector is countercyclical, but the thematic composition remains stable. These results, not driven by countries' financial constraints, imply that countries behind the innovation frontier might strengthen their resilience to economic crises by adopting countercyclical R&D strategies.

Keywords: R&D; Public Policy; Business Cycle (search for similar items in EconPapers)
JEL-codes: E32 H12 H50 O38 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ino, nep-mac and nep-sbm
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Working Paper: Public R&D investment in economic crises (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242467

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