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Public Funding for Basic Research in an Endogenous Growth Model

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  • Pierluigi Murro

    () (LUISS Guido Carli, Rome)

Abstract

The paper deals with the effects of government policy promoting basic research as an incentive to economic growth. Government is included into a Schumpeterian endogenous growth model, in which, thanks to the income proceeding from proportional taxation of monopolistic enterprises profits, it is enabled to carry out basic research activities which match applied research carried out by private enterprises. The results obtained show how it is possible that government determine a taxation level able to optimize economic growth. The effectiveness will be determined by the market. In particular, high competition levels make government policy less effective.

Suggested Citation

  • Pierluigi Murro, 2007. "Public Funding for Basic Research in an Endogenous Growth Model," Rivista di Politica Economica, SIPI Spa, vol. 97(6), pages 203-228, November-.
  • Handle: RePEc:rpo:ripoec:v:97:y:2007:i:6:p:203-228
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    References listed on IDEAS

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Mamuneas, Theofanis P. & Ishaq Nadiri, M., 1996. "Public R&D policies and cost behavior of the US manufacturing industries," Journal of Public Economics, Elsevier, vol. 63(1), pages 57-81, December.
    3. María Morales, 2004. "Research policy and endogenous growth," Spanish Economic Review, Springer;Spanish Economic Association, vol. 6(3), pages 179-209, October.
    4. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    5. Park, Walter G., 1998. "A theoretical model of government research and growth," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 69-85, January.
    6. Gerhard Glomm & B. Ravikumar, 1994. "Growth-Inequality Trade-Offs in a Model with Public Sector R&D," Canadian Journal of Economics, Canadian Economics Association, vol. 27(2), pages 484-493, May.
    7. Mamuneas, Theofanis P., 1999. "Spillovers from publicly financed R&D capital in high-tech industries," International Journal of Industrial Organization, Elsevier, vol. 17(2), pages 215-239, February.
    8. Alessandra Pelloni, 1997. "Public Financing of Education and Research in a Model of Endogenous Growth," LABOUR, CEIS, vol. 11(3), pages 517-539, November.
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    Cited by:

    1. Pierluigi Murro, 2013. "The Determinants Of Innovation: What Is The Role Of Risk?," Manchester School, University of Manchester, vol. 81(3), pages 293-323, June.

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