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Rates Of Return On Physical And R&D Capital And Structure Of The Production Process: Cross Section And Time Series Evidence

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  • Jeffrey I. Bernstein
  • M. Ishaq Nadiri

Abstract

R&D investment is an outcome of a corporate plan and is influenced by the exisintg technology, by prices, by product demand characteristics, and by the legacy of past capital stock decisions. In this paper we focus on the determinants and interaction of labor, physical capital and R&D. In particular, we investigate three major issues. The first relates to the nature of the factor substitution possibilities between the three inputs in response to changes in input pricees and estimate the own and cross once elasticities of the factors of production. The second problem pertains to the magnitude of which output expansion (or what may be considered the same thing, product demand growth) increases labor, physical, and R&D capital. Finally, we address the extent to which adjustment costs affect factor demands, and measure the magnitude of these costs for physical and R&D capital.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2570.

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Date of creation: Apr 1988
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Publication status: published as Bernstein, Jeffrey I. and M. Ishaq Nadiri. "Interindustry R&D Sillovers, Rates Of Return, And Production In High-Tech Industries," American Economic Review, 1988, v78(2), 429-433.
Handle: RePEc:nbr:nberwo:2570

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  1. Robert S. Pindyck & Julio J. Rotemberg, 1982. "Dynamic Factor Demands Under Rational Expectations," NBER Working Papers 1015, National Bureau of Economic Research, Inc.
  2. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, Elsevier, vol. 16(3), pages 339-365, August.
  3. Epstein, Larry G & Denny, Michael G S, 1983. "The Multivariate Flexible Accelerator Model: Its Empirical Restrictions and an Application to U.S. Manufacturing," Econometrica, Econometric Society, Econometric Society, vol. 51(3), pages 647-74, May.
  4. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 1029-54, July.
  5. Zvi Griliches, 1998. "Returns to Research and Development Expenditures in the Private Sector," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 49-81 National Bureau of Economic Research, Inc.
  6. M. Ishaq Nadiri & George C. Bitros, 1980. "Research and Development Expenditures and Labor Productivity at the Firm Level: A Dynamic Model," NBER Chapters, in: New Developments in Productivity Measurement, pages 387-418 National Bureau of Economic Research, Inc.
  7. Dale W. Jorgenson & Jean-Jacques Laffont, 1974. "Efficient Estimation of Nonlinear Simultaneous Equations with Additive Disturbances," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 65-90 National Bureau of Economic Research, Inc.
  8. Meese, Richard, 1980. "Dynamic factor demand schedules for labor and capital under rational expectations," Journal of Econometrics, Elsevier, Elsevier, vol. 14(1), pages 141-158, September.
  9. Hansen, Lars Peter & Singleton, Kenneth J, 1982. "Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models," Econometrica, Econometric Society, Econometric Society, vol. 50(5), pages 1269-86, September.
  10. Treadway, Arthur B., 1974. "The globally optimal flexible accelerator," Journal of Economic Theory, Elsevier, Elsevier, vol. 7(1), pages 17-39, January.
  11. Minasian, Jora R, 1969. "Research and Development, Production Functions, and Rates of Return," American Economic Review, American Economic Association, American Economic Association, vol. 59(2), pages 80-85, May.
  12. Nadiri, M Ishaq, 1980. "Sectoral Productivity Slowdown," American Economic Review, American Economic Association, American Economic Association, vol. 70(2), pages 349-52, May.
  13. M. Ishaq Nadiri, 1980. "Sectoral Productivity Slowdown," NBER Working Papers 0423, National Bureau of Economic Research, Inc.
  14. Mortensen, Dale T, 1973. "Generalized Costs of Adjustment and Dynamic Factor Demand Theory," Econometrica, Econometric Society, Econometric Society, vol. 41(4), pages 657-65, July.
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Cited by:
  1. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
  2. Bronwyn H. Hall & Jacques Mairesse & Pierre Mohnen, 2010. "Measuring the Returns to R&D," CIRANO Working Papers, CIRANO 2010s-02, CIRANO.
  3. Carmela Martin & Francisco J. Velazquez & Bernard Funck, 2001. "European Integration and Income Convergence : Lessons for Central and Eastern European Countries," World Bank Publications, The World Bank, number 13968, August.
  4. Matthew Rafferty, 2003. "Do Business Cycles Influence Long-Run Growth? The Effect of Aggregate Demand on Firm-Financed R&D Expenditures," Eastern Economic Journal, Eastern Economic Association, vol. 29(4), pages 607-618, Fall.
  5. Marcel Dagenais & Pierre Mohnen & Pierre Therrien, 1997. "Do Canadian Firms Respond to Fiscal Incentives to Research and Development?," CIRANO Working Papers, CIRANO 97s-34, CIRANO.
  6. James R. Hines, Jr., 1993. "No Place Like Home: Tax Incentives and the Location of R&D by American Multinationals," NBER Working Papers 4574, National Bureau of Economic Research, Inc.
  7. Bronwyn Hall, 1992. "R&D Tax Policy During the Eighties: Success or Failure?," NBER Working Papers 4240, National Bureau of Economic Research, Inc.
  8. G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
  9. Tetsuji Yamada & Tadashi Yamada & Guorn Liu, 1991. "Labor Productivity and Market Competition in Japan," NBER Working Papers 3800, National Bureau of Economic Research, Inc.
  10. Carmela Martin & Francisco J. Velazquez., 2001. "An Assessment of Real Convergence of Less Developed EU Members: Lessons for the CEEC Candidates," European Economy Group Working Papers, European Economy Group 5, European Economy Group.
  11. Nadiri, M. Ishaq & Nandi, Banani, 1997. "The changing structure of cost and demand for the U.S. telecommunications industry," Information Economics and Policy, Elsevier, Elsevier, vol. 9(4), pages 319-347, December.
  12. Carmela Martín & Ismael Sanz, 2003. "Real Convergence and European Integration: The Experience of the Less Developed EU Members," Empirica, Springer, Springer, vol. 30(3), pages 205-236, September.
  13. Kizuku Takao, 2014. "Dynamic effects of anticipated and temporary tax changes in a R&D-based growth model," ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 0913, Institute of Social and Economic Research, Osaka University.
  14. M. Ishaq Nadiri & Banani Nandi, 1996. "The Changing Structure of Cost and Demand for the U.S. Telecommunications Industry," NBER Working Papers 5820, National Bureau of Economic Research, Inc.

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