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Do Business Cycles Alter the Composition of Research and Development Expenditures?

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  • Matthew Rafferty

Abstract

Do business cycles cause firms to alter the composition of research and development (R&D) expenditures? This article uses aggregate data on U.S. firm‐financed R&D expenditures during the 1956–96 period to address this issue. The mix of R&D expenditures changes over the business cycles with firms increasing the amount of basic R&D and reducing the amount of development R&D during recessions. Though the effects are small, the results raise the possibility that business cycles influence the rate of long‐run growth. (JEL E33, O30)

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  • Matthew Rafferty, 2003. "Do Business Cycles Alter the Composition of Research and Development Expenditures?," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 394-405, July.
    • Handle: RePEc:bla:coecpo:v:21:y:2003:i:3:p:394-405
    DOI: 10.1093/cep/byg020
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    References listed on IDEAS

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    Cited by:

    1. Daniel Giedeman & Paul Isely & Gerald Simons, 2006. "Innovation and the Business Cycle: A Comparison of the U.S. Semiconductor and Automobile Industries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 12(2), pages 277-286, May.
    2. Masino, Serena, 2013. "Macro-Institutional Instability and the Incentive to Innovate," MPRA Paper 45178, University Library of Munich, Germany.
    3. Simona Bovha-Padilla & Joze P. Damijan & Jozef Konings, 2009. "Financial Constraints and the Cyclicality of R&D Investment:Evidence from Slovenia," LICOS Discussion Papers 23909, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. Masino, Serena, 2012. "Macroeconomic instability and the incentive to innovate," MPRA Paper 38766, University Library of Munich, Germany.
    5. Chih‐Hai Yang & Yi‐Yin Wu & Hui‐Lin Lin, 2010. "Outward Investment To China And Local Innovation Of Taiwanese Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 61(4), pages 538-557, December.
    6. repec:kap:iaecre:v:12:y:2006:i:2:p:277-286 is not listed on IDEAS
    7. Anna Wziątek-Kubiak & Marek Pęczkowski, 2021. "Strengthening the Innovation Resilience of Polish Manufacturing Firms in Unstable Environments," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(2), pages 716-739, June.
    8. Masino, Serena, 2012. "Macroeconomic instability and the incentive to innovate," MPRA Paper 38830, University Library of Munich, Germany.

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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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