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Business Cycles and the Dynamics of Innovation: a Theoretical Perspective

Author

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  • Manzoor Ahmad

    (Pakhtunkhwa Economic Policy Research Institute (PEPRI), Faculty of Business and Economics, Abdul Wali Khan University Mardan)

  • Zahoor Ul Haq

    (Pakhtunkhwa Economic Policy Research Institute (PEPRI), Faculty of Business and Economics, Abdul Wali Khan University Mardan)

  • Shehzad Khan

    (Abdul Wali Khan University Mardan)

Abstract

This paper constructs a simple dynamic growth model and deducts four theoretical predictions: prediction I, new knowledge creations and research and development expenditures (R&DE) contribute to economic upturns and downturns; prediction II, the R&DE and new knowledge creations upsurge and fall in the economic expansions and contractions periods, respectively; prediction III, the research intensity and frequency of new knowledge creations increase and reduce during boom and recession periods, respectively; prediction IV, positive and negative shocks in R&DE and new knowledge creation are caused by changes in consumption, saving, R&DE, and innovation activities during economic boom and slump periods; and prediction IV, innovation and gross domestic product have a bidirectional causal nexus during trade cycles.

Suggested Citation

  • Manzoor Ahmad & Zahoor Ul Haq & Shehzad Khan, 2024. "Business Cycles and the Dynamics of Innovation: a Theoretical Perspective," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 1418-1436, March.
    • Handle: RePEc:spr:jknowl:v:15:y:2024:i:1:d:10.1007_s13132-023-01155-6
    DOI: 10.1007/s13132-023-01155-6
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