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Research & development and growth: A Bayesian model averaging analysis

Listed author(s):
  • Horvath, Roman

We examine the effect of research and development (R&D) on long-term economic growth using the Bayesian model averaging (BMA) to deal rigorously with model uncertainty. Previous empirical studies, which applied BMA, investigated the effect of dozens of regressors on long-term growth, but they did not examine the effect of R&D due to data unavailability. We extend these studies by proposing to capture the investment in R&D by the number of Nobel prizes in science. Using our indicator, the estimates show that R&D exerts a positive effect on long-term growth. This result is robust to many different parameter and model prior structures as well as to alternative definitions of R&D indicator.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999311001994
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 6 ()
Pages: 2669-2673

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:6:p:2669-2673
DOI: 10.1016/j.econmod.2011.08.007
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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