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Back to Basics: Basic Research Spillovers, Innovation Policy and Growth

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Author Info

  • Ufuk Akcigit

    ()
    (Department of Economics, University of Pennsylvania and NBER)

  • Douglas Hanley

    ()
    (Department of Economics, University of Pennsylvania)

  • Nicolas Serrano-Velarde

    ()
    (Bocconi University and IGIER)

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    Abstract

    This paper introduces a model of endogenous growth through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a general equilibrium framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard R&D policies can accentuate the dynamic misallocation in the economy. We also find a strong complementarity between the property rights of basic research and the optimal funding of public research.

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    File URL: http://economics.sas.upenn.edu/system/files/13-051.pdf
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    Bibliographic Info

    Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 13-051.

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    Length: 57 pages
    Date of creation: 18 Sep 2013
    Date of revision:
    Handle: RePEc:pen:papers:13-051

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    Keywords: Innovation; basic research; applied research; research and development; government spending; endogenous growth; spillover;

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    1. Pakes, Ariel & Griliches, Zvi, 1984. "Estimating Distributed Lags in Short Panels with an Application to the Specification of Depreciation Patterns and Capital Stock Constructs," Review of Economic Studies, Wiley Blackwell, vol. 51(2), pages 243-62, April.
    2. Partha, Dasgupta & David, Paul A., 1994. "Toward a new economics of science," Research Policy, Elsevier, vol. 23(5), pages 487-521, September.
    3. E. Bacchiocchi & F. Montobbio, 2009. "Knowledge diffusion from university and public research. A comparison between US, Japan and Europe using patent citations," The Journal of Technology Transfer, Springer, vol. 34(2), pages 169-181, April.
    4. Tor Jakob Klette & Samuel Kortum, 2002. "Innovating Firms and Aggregate Innovation," NBER Working Papers 8819, National Bureau of Economic Research, Inc.
    5. Jacques Mairesse & Pierre Mohnen, 2010. "Using Innovations Surveys for Econometric Analysis," NBER Working Papers 15857, National Bureau of Economic Research, Inc.
    6. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
    7. Rebecca Henderson & Adam B. Jaffe & Manuel Trajtenberg, 1998. "Universities As A Source Of Commercial Technology: A Detailed Analysis Of University Patenting, 1965-1988," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 119-127, February.
    8. Estelle Dhont-Peltrault & Etienne Pfister, 2011. "R&D cooperation versus R&D subcontracting: empirical evidence from French survey data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 20(4), pages 309-341.
    9. Giammario Impullitti, 2010. "International Competition And U.S. R&D Subsidies: A Quantitative Welfare Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(4), pages 1127-1158, November.
    10. Link, Albert N, 1981. "Basic Research and Productivity Increase in Manufacturing: Additional Evidence," American Economic Review, American Economic Association, vol. 71(5), pages 1111-12, December.
    11. Mansfield, Edwin, 1980. "Basic Research and Productivity Increase in Manufacturing," American Economic Review, American Economic Association, vol. 70(5), pages 863-73, December.
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    Cited by:
    1. Prettner, Klaus & Werner, Katharina, 2014. "Human capital, basic research, and applied research: Three dimensions of human knowledge and their differential growth effects," Center for European, Governance and Economic Development Research Discussion Papers 186, University of Goettingen, Department of Economics.

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