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Innovation, public capital, and growth

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  • Agénor, Pierre-Richard
  • Neanidis, Kyriakos C.

Abstract

This paper studies interactions between innovation, public capital, and human capital in an OLG model of endogenous growth. Public capital affects growth not only through productivity, but also through innovation capacity and human capital accumulation. Numerical simulations, based on a calibrated version of the model, are used to illustrate these channels. Panel data regressions are presented next; they show that higher innovation performance promotes growth directly, whereas public capital has both direct and indirect growth effects by promoting human capital accumulation and innovation capacity. Elasticity estimates derived from simultaneous equation techniques show that the general equilibrium effects of public capital on steady-state output per capita (which account for indirect effects) are significantly higher than those derived from single equation methods.

Suggested Citation

  • Agénor, Pierre-Richard & Neanidis, Kyriakos C., 2015. "Innovation, public capital, and growth," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 252-275.
    • Handle: RePEc:eee:jmacro:v:44:y:2015:i:c:p:252-275
    DOI: 10.1016/j.jmacro.2015.03.003
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    More about this item

    Keywords

    Public capital; Innovation; Endogenous growth; Nonlinearities; GMM estimation;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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