Abstract

http://ssrn.com/abstract=2368587
 


 



What Affects Innovation More: Policy or Policy Uncertainty?


Utpal Bhattacharya


Hong Kong University of Science & Technology - HKUST School of Business and Management

Po-Hsuan Hsu


University of Hong Kong

Xuan Tian


Indiana University - Kelley School of Business - Department of Finance

Yan Xu


HKU, Faculty of Business and Economics

April 14, 2015

Kelley School of Business Research Paper No. 2014-48

Abstract:     
Motivated by a theoretical model, we empirically examine for 43 countries whether it is policy or policy uncertainty that affects technological innovation more. We find that innovation, measured by growth in patent counts, citations, and originality, is not, on average, affected by which policy is in place. Innovation, however, drops significantly during times of policy uncertainty measured by national elections. To establish causality, we use close presidential elections, whose timings are pre-determined and results are unpredictable, and ethnic fractionalization that are likely exogenous to policy and policy uncertainty. Political compromise, our paper concludes, is a plus for innovation.

Number of Pages in PDF File: 62

Keywords: Innovation, Policy uncertainty, Policy, Political party

JEL Classification: G18, G38, O31, D80, E66


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Date posted: December 18, 2013 ; Last revised: April 15, 2015

Suggested Citation

Bhattacharya , Utpal and Hsu, Po-Hsuan and Tian, Xuan and Xu, Yan, What Affects Innovation More: Policy or Policy Uncertainty? (April 14, 2015). Kelley School of Business Research Paper No. 2014-48. Available at SSRN: http://ssrn.com/abstract=2368587 or http://dx.doi.org/10.2139/ssrn.2368587

Contact Information

Utpal Bhattacharya (Contact Author)
Hong Kong University of Science & Technology - HKUST School of Business and Management ( email )
Clear Water Bay
Kowloon
Hong Kong
Po-Hsuan Hsu
University of Hong Kong ( email )
Pokfulam Road
Hong Kong
China
Xuan Tian
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. Tenth Street
Bloomington, IN 47405
United States
812-8553420 (Phone)
824-8555875 (Fax)
HOME PAGE: http://kelley.iu.edu/tianx

Yan Xu
HKU, Faculty of Business and Economics ( email )
Pok Fu Lam Road
Hong Kong
Hong Kong
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