Constructing a price deflator for R&D: calculating the price of knowledge investments as a residual
We model the production and use of knowledge investment and show how the model can be used to infer the unknown price of knowledge using two approaches. The first is often used by national accounting offices and is based on costs in the knowledge-producing sector. We show this implicitly assumes no market power and no productivity in the production of knowledge. We set out an alternative approach that focuses on the downstream knowledge-using sector, the final output sector. The science policy practice of using the GDP deflator is a simple variant of this approach, while the full approach allows market power and implies backing out the price of R&D from final output prices, factor costs, and TFP. We estimate a R&D price for the United Kingdom from 1985 to 2005 using the full approach. The index falls strongly relative to the GDP deflator suggesting conventionally-measured real R&D is substantially understated.
(This abstract was borrowed from another version of this item.)
|Date of creation:||30 Nov 2011|
|Contact details of provider:|| Postal: South Kensington campus, London SW7 2AZ|
Phone: +44 (0)20 7594 9137
Fax: +44 (0)20 7823 7685
Web page: http://www.imperial.ac.uk/business-school
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:imp:wpaper:9028. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr David A Wilson)
If references are entirely missing, you can add them using this form.