R&D smoothing: evidence and some theory
Serodio, Pedro ORCID: https://orcid.org/0000-0001-8835-1611
(2020)
R&D smoothing: evidence and some theory.
Working Paper.
Middlesex University Research Repository, London, UK.
.
[Monograph]
(Published online first)
![]() |
PDF
- Draft pre-submission version (with author's formatting)
Restricted to Repository staff and depositor only Download (1MB) |
Abstract
We revisit the debate over the cyclical pattern of R&D and its implications for Schumpeter’s opportunity cost hypothesis using a production asset pricing model to explain firms’ research spending decisions and comparing simulation results with empir- ical estimates. These results overwhelmingly suggest that there is a significant degree of smoothing in research spending, both in theory and in practice, which implies both pro-cyclical behaviour in its growth rate as well as counter-cyclical behaviour in the share of R&D on output. Evidence in favour of modified version of the opportunity cost hypothesis is also uncovered, with firms investing counter-cyclically in research as measured by its ratio with respect to the sum of R&D and capital expenditures. Al- ternative theories for the observed pro-cyclical behaviour of research spending are also addressed, with those based on internal and/or external financial constraints receiving very little empirical supports.
Item Type: | Monograph (Working Paper) |
---|---|
Keywords (uncontrolled): | Research & development, business cycles |
Research Areas: | A. > Business School > Economics |
Item ID: | 29146 |
Useful Links: | |
Depositing User: | Pedro Matos Serodio |
Date Deposited: | 04 Mar 2020 15:29 |
Last Modified: | 15 Dec 2020 17:13 |
URI: | https://eprints.mdx.ac.uk/id/eprint/29146 |
Actions (login required)
![]() |
View Item |
Statistics
Additional statistics are available via IRStats2.