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Macro-Institutional Instability and the Incentive to Innovate

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  • Masino, Serena

Abstract

This paper investigates the channels through which macroeconomic and institutional instability prevents or hinders innovative investment undertakings financed by the domestic private sector. The analysis is based on a sample of 44 countries representing all levels of development and considers a number of instability dimensions. The results suggest a negative impact of real, monetary and political instability on the aggregate level of national R&D financed by the business sector. Thus, they highlight the desirability of stable macro-institutional environments in preventing avoidance or abandonment of private innovation undertakings.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45178.

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Date of creation: 17 Mar 2013
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Handle: RePEc:pra:mprapa:45178

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Keywords: Macroeconomic Volatility; Political Instability; R&D Investment; Innovation;

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