Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284035 
Year of Publication: 
2023
Series/Report no.: 
Staff Report No. 1075
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
R&D investment spending exhibits a delayed and hump-shaped response to shocks. We show in a simple partial equilibrium model that rapidly adjusting R&D investment is costly if the probability of converting new hires into productive R&D workers ("onboarding") is decreasing in the number of new hires ("congestion"). Congestion thus causes R&D-producing firms to slowly hire new workers in response to good shocks and hoard workers in response to bad shocks, providing a microfoundation for convex adjustment costs in R&D investment. Using novel, high-frequency productivity data on individual software developers collected from GitHub, a popular online collaboration platform, we provide quantitative evidence for such congestion. Calibrated to this evidence, a sticky-wage new Keynesian model with heterogeneous investment-producing firms subject to congestion in onboarding and no other frictions yields hump-shaped responses of R&D investment to shocks.
Subjects: 
intangibles
monetary policy
R&D
innovation
team specific capital
labor adjustment costs
JEL: 
E22
O36
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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