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Title:The Dynamics of R&D and Innovation in the Short Run and in the Long Run PDF Logo
Authors:Peri, Giovanni
Bottazzi, Laura
Issue Date:2003
Series/Report no.:Working papers / University of California, Department of Economics 03,7
Abstract:In this paper we estimate the dynamic relationship between resources used in R&D by some OECD countries and their innovation output as measured by patent applications. We first estimate a long-run cointegration relation using recently developed tests and panel estimation techniques. We find that the stock of knowledge of a country, its R&D resources and the stock of international knowledge move together in the long run. Then, imposing this long-run relation across variables we analyze the impulse response of new ideas to a shock to R&D or to a shock to innovation by estimating an error correction mechanism. We find that internationally generated ideas have a very significant impact in helping innovation in a country. As a consequence, a positive shock to innovation in a large country as the US has, both in the short and in the long run, a significant positive effect on the innovation of all other countries.
Subjects:Innovation
Panel Cointegration
Error Correction Mechanism
International R&D Spillovers
JEL:F43
O31
C23
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, UC Davis

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