Demand shocks and firm-financed R&D expenditures
AbstractBusiness cycles might affect firms' ability and incentive to perform R&D. Firms finance most R&D activities out of cash flow so when cash flow decreases the funds available for R&D also decreases. This limits the ability of firms to perform R&D, potentially leading to reduced R&D expenditures during recessions. However, business cycles also influence the incentive to perform R&D. The opportunity cost of funds devoted to R&D falls during recessions since the return on production will likely be lower than during an expansion. During recessions, this provides firms with an incentive to redistribute an existing pool of funds away from production and towards R&D projects. This paper tests whether the business cycle influences the incentive and ability of firms to engage in R&D activities, in particular examining whether the response is symmetric across the business cycle.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 36 (2004)
Issue (Month): 14 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEC20
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- repec:fth:coluec:540 is not listed on IDEAS
- M Pesaran & Yongcheol Shin & Ron P Smith, 2004. "Pooled mean group estimation of dynamic heterogeneous panels," ESE Discussion Papers 16, Edinburgh School of Economics, University of Edinburgh.
- Rammer, Christian, 2011.
"Auswirkungen der Wirtschaftskrise auf die Innovationstätigkeit der Unternehmen in Deutschland,"
ZEW Discussion Papers
11-070, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Christian Rammer, 2011. "Auswirkungen der Wirtschaftskrise auf die Innovationstätigkeit der Unternehmen in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 80(3), pages 13-34.
- Rammer, Christian, 2012. "Schwerpunktbericht zur Innovationserhebung 2010: Management von Innovationsprojekten - Auswirkungen der Wirtschaftskrise," ZEW Dokumentationen 12-03, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Taiji Harashima, 2005. "The Pro-cyclical R&D Puzzle: Technology Shocks and Pro-cyclical R&D Expenditure," Macroeconomics 0507012, EconWPA, revised 12 Jul 2005.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.