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Internal rates of return for public R&D from VECM estimates for 17 OECD countries

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  • Ziesemer, Thomas

    (RS: GSBE MORSE, Macro, International & Labour Economics, RS: UNU-MERIT)

Abstract

In this paper we evaluate vector-error-correction model (VECM) estimations and simulations of a companion paper to show (i) internal rates of return to public R&D shocks of 17 OECD countries, (ii) the related payback periods, gain/GDP ratios, and discounted (at 4%) net present values, (iii) the underlying effects of public R&D shocks on domestic and foreign private and public R&D stocks. 14 countries show high internal rates of return from positive public R&D shocks if projects are stopped when gains get negative. Three countries show crowding out effects and require (initial) reductions of public R&D before showing positive results through crowding in of private R&D.

Suggested Citation

  • Ziesemer, Thomas, 2023. "Internal rates of return for public R&D from VECM estimates for 17 OECD countries," MERIT Working Papers 2023-026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2023026
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    More about this item

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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