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Do R&D subsidies necessarily stimulate economic growth?

Author

Listed:
  • Chen, Ping-ho
  • Chu, Hsun
  • Lai, Ching-Chong

Abstract

This paper analyzes the growth effect of subsidy policies in a modified R&D-based growth model of Romer (1990), in which both innovation and capital accumulation are engines of long-run economic growth. We show that, under certain conditions, subsidizing the R&D sector may be growth-impeding.

Suggested Citation

  • Chen, Ping-ho & Chu, Hsun & Lai, Ching-Chong, 2015. "Do R&D subsidies necessarily stimulate economic growth?," MPRA Paper 66061, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:66061
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    File URL: https://mpra.ub.uni-muenchen.de/66061/1/MPRA_paper_66061.pdf
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    References listed on IDEAS

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    7. Angus C. Chu & Ching‐Chong Lai & Chih‐Hsing Liao, 2019. "A Tale of Two Growth Engines: Interactive Effects of Monetary Policy and Intellectual Property Rights," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(7), pages 2029-2052, October.
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    More about this item

    Keywords

    R&D; subsidy policy; endogenous growth;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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