Public R&D Investment in Economic Crises

42 Pages Posted: 21 Jan 2021

See all articles by Maikel Pellens

Maikel Pellens

Ghent University; MSI, Faculty of Business and Economics, KULeuven; Centre for European Economic Research

Bettina Peters

Center for European Economic Research (ZEW)

Martin Hud

ZEW – Leibniz Centre for European Economic Research

Christian Rammer

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research

Georg Licht

ZEW - Leibniz Centre for European Economic Research

Date Written: 2020

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 a cyclical during recessions. It is also heterogeneous across countries: Innovation leaders and followers behave countercyclically during recessions while moderate innovators behave pro cyclically. 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

JEL Classification: O38, H50, H12, E32

Suggested Citation

Pellens, Maikel and Peters, Bettina and Hud, Martin and Rammer, Christian and Licht, Georg, Public R&D Investment in Economic Crises (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-088, Available at SSRN: https://ssrn.com/abstract=3770547 or http://dx.doi.org/10.2139/ssrn.3770547

Maikel Pellens (Contact Author)

Ghent University ( email )

Ghent, 9000
Belgium

MSI, Faculty of Business and Economics, KULeuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Centre for European Economic Research

Mannheim
Germany

Bettina Peters

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany
+496211235174 (Phone)
+496211235170 (Fax)

HOME PAGE: http://www.zew.de

Martin Hud

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Christian Rammer

ZEW – Leibniz Centre for European Economic Research - Industrial Economics and International Management Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Georg Licht

ZEW - Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

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