Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/230409 
Year of Publication: 
2018
Series/Report no.: 
Cardiff Economics Working Papers No. E2018/3
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
We show that a DSGE model in which subsidies to private sector R&D stimulate economic growth, following the predictions of semi-endogenous growth theory, can account for the joint behaviour of UK output and total factor productivity for 1981-2010. R&D subsidies are measured as government-funded R&D performed by the private sector as a proportion of total private sector R&D. We estimate and test the performance of the model using Indirect Inference, and also investigate the robustness of the results using a Monte Carlo exercise. Our findings indicate that sharp cuts in R&D subsidies tend to have highly persistent growth effects in the UK.
Subjects: 
R&D
subsidies
economic growth
government policy
JEL: 
E00
O00
O38
O50
Document Type: 
Working Paper

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