Econometric Models for Count Data with an Application to the Patents-R&D Relationship

59 Pages Posted: 12 Apr 2004 Last revised: 21 Jul 2021

See all articles by Jerry A. Hausman

Jerry A. Hausman

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

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)

Date Written: October 1984

Abstract

This paper focuses on developing and adapting statistical models of counts (non-negative integers) in the context of panel data and using them to analyze the relationship between patents and R&D expenditures. The model used is an application and generalization of the Poisson distribution to allow for independent variables; persistent individual (fixed or random) effects, and "noise" or randomness in the Poisson probability function. We apply our models to a data set previously analyzed by Pakes and Griliches using observations on 128 firms for seven years, 1968-74. Our statistical results indicate clearly that to rationalize the data, we need both a disturbance in the conditional within dimension and a different one, with a different variance, in the marginal (between) dimension. Adding firm specific variables, log book value and a scientific industry dummy, removes most of the positive correlation between the individual firm propensity to patent and its R&D intensity. The other new finding is that there is an interactive negative trend in the patents - R&D relationship, that is, firms are getting less patents from their more recent R&D investments, implying a decline in the "effectiveness" or productivity of R&D.

Suggested Citation

Hausman, Jerry A. and Hall, Bronwyn H. and Griliches, Zvi, Econometric Models for Count Data with an Application to the Patents-R&D Relationship (October 1984). NBER Working Paper No. t0017, Available at SSRN: https://ssrn.com/abstract=284047

Jerry A. Hausman (Contact Author)

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Bronwyn H. Hall

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Zvi Griliches

(Deceased)

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