Are There International R&D Spillovers Among Randomly Matched Trade Partners?: A Response to Keller

Abstract

Keller (1998) reexamines Coe and Helpman`s (1995) analysis of international R&D spillovers focusing on the weights used to define the foreign R&D capital stock. Keller creates random weights and shows that they give rise to positive estimates of international R&D spillovers, casting doubts on the robustness of Coe and Helpman`s findings. We show that Keller`s random weights are essentially simple averages with a random error. We derive alternative random weights and present regressions showing that when they are used to define the foreign R&D capital stock, the estimated international R&D spillover estimates are nonexistent, as would be expected.

Keywords: R&D, spillovers, technology, total factor productivity

JEL Classification: C15, F12, F2, O3, O4