Patents and R&D: is There a Lag?

36 Pages Posted: 4 Aug 2000 Last revised: 24 Jun 2021

See all articles by Bronwyn H. Hall

Bronwyn H. Hall

University of California at Berkeley; National Bureau of Economic Research (NBER); Institute for Fiscal Studies (IFS); Max Planck Institute for Innovation and Competition

Zvi Griliches

(Deceased)

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1984

Abstract

This paper extends earlier work on the RID to patents relationship (Pakes-Griliches 1980, and Hausman, Hall, and Griliches,1984) to a larger but shorter panel of firms. The focus of the paper is on solving a number of econometric problems associated with the discreteness of the dependent variable and the shortness of the panel in the time dimension. We compare weighted nonlinear least squares as wellas Poisson-type models as solutions to the former problem. In attempting to estimate a lag structure on R&D in the absence of a sufficient history of the variable, we take two approaches: first, we use the conditional version of the negative binomial model, and second, we estimate the R&D variable itself as a low order stochastic process and use this information to control for unobserved R&D. R&D itself turns out to befairly well approximated by a random walk. Neither approach yields strong evidence of a long lag. The available sample, though numerically large, turns out not to be particularily informative on this question. It does reconfirm, however, a significant effect of R&D on patenting (with most of it occuring in the first year) and the presence of rather wide and semi-permanent differences among firms in their patenting policies.

Suggested Citation

Hall, Bronwyn H. and Griliches, Zvi and Hausman, Jerry A., Patents and R&D: is There a Lag? (September 1984). NBER Working Paper No. w1454, Available at SSRN: https://ssrn.com/abstract=238169

Bronwyn H. Hall (Contact Author)

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Zvi Griliches

(Deceased)

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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