Research paper / Leverhulme Centre for Research on Globalisation and Economic Policy 2001,16
We re-examine the effects of liquidity constraints on R&D investment. In our theoretical section we extend the neoclassical framework of investment in physical capital by introducing R&D and liquidity constraints. We analyse this issue empirically using firm-level data for R&D active manufacturing firms in the Republic of Ireland. Our results provide evidence that R&D investment is financially constrained which is in line with previous studies of US firms.