An Analysis of Macroeconomic Fluctuations on the Number of Patents Awarded in the United States

We examine the extent to which U.S. patent applications and patents granted respond to the cyclical variation of the U.S. economy as reflected by major macroeconomic aggregates such as real GDP and others. We find that patents granted are cointegrated with GDP and research and development indicating a long run stochastic relationship among these variables. We also find Granger Causality going from the growth in real GDP to the number of patents granted. In particular, our findings show that past changes in the growth rate of real GDP leads to increases in the future rate of growth of patents granted. As expected, R&D is also related patents granted to although its relationship with patents granted is weaker than with real GDP.