R&D and Aggregate Fluctuations

Empirical observations raise interesting questions regarding the sources of the excessive volatility in the R&D sector as well as the nature of the relation between the sector and aggregate fluctuations. Using US data for the period 1959–2007, we identify sectoral technology and capital investme...

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Bibliographic Details
Main Authors:	Artuc, Erhan, Pourpourides, Panayiotis M.
Format:	Journal Article
Language:	en_US
Published:	Elsevier 2015
Subjects:	Cycles Technology shocks Business cycles Investment-specific shocks R&D VAR
Online Access:	http://hdl.handle.net/10986/21412

id	okr-10986-21412
recordtype	oai_dc
spelling	okr-10986-214122021-04-23T14:04:02Z R&D and Aggregate Fluctuations Artuc, Erhan Pourpourides, Panayiotis M. Cycles Technology shocks Business cycles Investment-specific shocks R&D VAR Empirical observations raise interesting questions regarding the sources of the excessive volatility in the R&D sector as well as the nature of the relation between the sector and aggregate fluctuations. Using US data for the period 1959–2007, we identify sectoral technology and capital investment-specific shocks by employing a Vector Autoregression. The identifying assumptions are motivated by a two-sector dynamic general equilibrium model. Controlling for real and nominal factors, we find that capital investment-specific shocks explain 70 percent of fluctuations of R&D investment, while R&D technology shocks explain 30 percent of the variation of aggregate output, net of R&D investment. Technology shocks jointly explain almost all the variation of output in the R&D sector and 78 percent of the variation of output in the rest of the economy. They also constitute the main factor of the procyclicality of R&D investment. 2015-02-05T22:00:28Z 2015-02-05T22:00:28Z 2014-08-01 Journal Article Journal of Economic Dynamics and Control 0165-1889 http://hdl.handle.net/10986/21412 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Elsevier Publications & Research Publications & Research :: Journal Article UNITED STATES
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	Cycles Technology shocks Business cycles Investment-specific shocks R&D VAR
spellingShingle	Cycles Technology shocks Business cycles Investment-specific shocks R&D VAR Artuc, Erhan Pourpourides, Panayiotis M. R&D and Aggregate Fluctuations
geographic_facet	UNITED STATES
description	Empirical observations raise interesting questions regarding the sources of the excessive volatility in the R&D sector as well as the nature of the relation between the sector and aggregate fluctuations. Using US data for the period 1959–2007, we identify sectoral technology and capital investment-specific shocks by employing a Vector Autoregression. The identifying assumptions are motivated by a two-sector dynamic general equilibrium model. Controlling for real and nominal factors, we find that capital investment-specific shocks explain 70 percent of fluctuations of R&D investment, while R&D technology shocks explain 30 percent of the variation of aggregate output, net of R&D investment. Technology shocks jointly explain almost all the variation of output in the R&D sector and 78 percent of the variation of output in the rest of the economy. They also constitute the main factor of the procyclicality of R&D investment.
format	Journal Article
author	Artuc, Erhan Pourpourides, Panayiotis M.
author_facet	Artuc, Erhan Pourpourides, Panayiotis M.
author_sort	Artuc, Erhan
title	R&D and Aggregate Fluctuations
title_short	R&D and Aggregate Fluctuations
title_full	R&D and Aggregate Fluctuations
title_fullStr	R&D and Aggregate Fluctuations
title_full_unstemmed	R&D and Aggregate Fluctuations
title_sort	r&d and aggregate fluctuations
publisher	Elsevier
publishDate	2015
url	http://hdl.handle.net/10986/21412
_version_	1764448188353216512

R&D and Aggregate Fluctuations

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