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R&D—Productivity Dynamics: Causality, Lags, and ‘Dry Holes’

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  • Petri Rouvinen

Abstract

We study four issues in R&D-productivity dynamics: does R&D Granger cause productivity, is there a lag between R&D and its productivity effects, does the potency of R&D vary in timing and magnitude, and what is the role of R&D spillovers and aggregate shocks. The results suggest that R&D causes productivity but not vice versa, productivity responds to changes in R&D with a considerable lag, the potency of R&D varies in timing and magnitude, and that the elasticity of productivity with respect to aggregate shocks is high, but negligible with respect to R&D spillovers.

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  • Petri Rouvinen, 2002. "R&D—Productivity Dynamics: Causality, Lags, and ‘Dry Holes’," Journal of Applied Economics, Taylor & Francis Journals, vol. 5(1), pages 123-156, May.
    • Handle: RePEc:taf:recsxx:v:5:y:2002:i:1:p:123-156
    DOI: 10.1080/15140326.2002.12040573
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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