Back to Basics: Basic Research Spillovers, Innovation Policy and Growth
53 Pages Posted: 19 Dec 2016
There are 3 versions of this paper
Back to Basics: Basic Research Spillovers, Innovation Policy and Growth
Back to Basics: Basic Research Spillovers, Innovation Policy and Growth
Date Written: December 2016
Abstract
This paper introduces a general equilibrium model of endogenous technical change through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard innovation policies (e.g., uniform R&D tax credits) can accentuate the dynamic misallocation in the economy by oversubsidizing applied research. Policies geared towards public basic research and its transmission to the private sector are significantly welfare improving.
Keywords: applied research, basic research, Endogenous Growth, government spending, innovation, productivity, Research and Development, spillover.
JEL Classification: J82, L25, L50, O31, O38, O40
Suggested Citation: Suggested Citation
Here is the Coronavirus
related research on SSRN
Back to Basics: Basic Research Spillovers, Innovation Policy and Growth
This is a CEPR Discussion Paper. CEPR charges a fee of $8.00 for this paper.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
