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Endogenous fluctuations with procyclical R&D

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  • Shinagawa, Shunsuke

Abstract

The literature on endogenous growth cycles predicts the countercyclical allocation of resources to R&D. However, this prediction is not supported by empirical studies. This study considers the R&D-based growth model with endogenous fluctuations introducing population growth and a negative externality that affects the productivity of R&D. We show that this simple modification makes R&D investment procyclical along sustained business cycles using both an overlapping generation framework and an infinitely-lived agent framework.

Suggested Citation

  • Shinagawa, Shunsuke, 2013. "Endogenous fluctuations with procyclical R&D," Economic Modelling, Elsevier, vol. 30(C), pages 274-280.
    • Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:274-280
    DOI: 10.1016/j.econmod.2012.09.024
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    More about this item

    Keywords

    R&D-based growth model; Cyclical properties of R&D expenditure; Endogenous fluctuations; Semi-endogenous growth;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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