Intrinsic Business Cycles with Procyclical R&D
نویسنده
چکیده
Recent empirical work Þnds that R&D expenditures are quite procyclical, even for Þrms that are not credit-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. This paper has beneÞtted from the comments of seminar participants at NYU. Funding from the Social Sciences and Humanities Research Council of Canada and the Canadian Institute for Advanced Research is gratefully acknowledged. The usual disclaimer applies.
منابع مشابه
An Evolutionary Model of Endogenous Business Cycles
In this paper, we present an evolutionary model of industry dynamics yielding endogenous business cycles with ‘Keynesian’ features. The model describes an economy composed of firms and consumers/workers. Firms belong to two industries. The first one performs R&D and produces heterogeneous machine tools. Firms in the second industry invest in new machines and produce a homogenous consumption goo...
متن کاملSchumpeterian Cycles with Procyclical R&D
Recent empirical work nds that R&D expenditures are quite procyclical, even for rms that are not credit-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 i...
متن کاملMacroeconomic Changes and Mortality in Mexico
While previous studies examine how the business cycle affects mortality in developed countries, less is known about this relationship in developing countries. In this paper, we investigate whether the procyclical nature of mortality in developed countries found by Ruhm (2000) and others is also present in Mexico. We assemble a unique panel data set that contains state-level data on mortality ra...
متن کاملAre Prices Countercyclical? Evidence From East Asian Countries
The cyclicality of prices has been in debate recently. One of the key stylized facts that has served as a cornerstone for traditional business cycle models is the procyclical behavior of prices. Recent research has questioned the empirical basis for this stylized fact. Using quarterly U.S. data, Kydland and Prescott (1990) report that cyclical components of U.S. prices and output are correlated...
متن کاملNominal Stylized Facts of U.S. Business Cycles
movements of money and prices, appear to be business cycle myths. In contrast to conventional wisdom, they argue that the price level (whether measured by the implicit GNP deflator or by the consumer price index), is countercyclical. Although the monetary base and M1 are both procyclical, neither leads the cycle. This evidence counters Mankiw’s (1989) criticism of real business cycle models on ...
متن کامل