Intrinsic Business Cycles with Pro-Cyclical R&D

Arbeitspapier

Recent empirical work finds that R&D expenditures are quite procyclical, even for firms that are not redit-constrained during downturns. This has been taken as strong evidence against Schumpeterian-style theories of business cycles that emphasize the idea that downturns in production may be good times to allocate labor towards innovative activities. Here we argue that the procyclicality of R&D investment is, in fact, quite consistent with at least one of these theories. In our analysis, we emphasize three key features of R&D investment relative to other types of innovative activity: (1) it uses knowledge intensively, (2) it is a long-term investment with uncertain applications and (3) it suffers from diminishing returns over time.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Queen's Economics Department Working Paper ; No. 1102

Classification and Topics

• Classification: Wirtschaft
• Subject: Schumpeterian ; R&D investment ; endogenous cycles ; endogenous growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Francois, Patrick ; Lloyd-Ellis, Huw
• Event: Veröffentlichung
• (who): Queen's University, Department of Economics
• (where): Kingston (Ontario)
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/189378
• Last update: 10.03.2025, 11:43 AM CET