Template-Type: ReDIF-Paper 1.0
Author-Name: Giovanni Peri
Author-Name-First: Giovanni
Author-Name-Last: Peri
Author-Workplace-Name: Department of Economics, University of California Davis
Title: The Dynamics of R&D and Innovation in the Long Run and in the Short Run
Abstract: In this paper we estimate the dynamic relationship between resources used in R&D by some OECD countries and their innovation output as measured by patent applications. We first estimate a long-run cointegration relation using recently developed tests and panel estimation techniques. We find that the stock of knowledge of a country, its R&D resources and the stock of international knowledge move together in the long run. Then, imposing this long-run relation across variables we analyze the impulse response of new ideas to a shock to R&D or to a shock to innovation  by estimating an error correction mechanism. We find that internationally generated ideas have a very significant impact in helping innovation in a country. As a consequence, a positive shock to innovation in a large country as the US has, both in the short and in the long run, a significant positive effect on the innovation of all other countries.
Length: 33
File-URL: https://repec.dss.ucdavis.edu/files/6MDQEcgs5SE3aqsKw2TrczHh/03-7.pdf
File-Format: application/pdf
Number: 13
Classification-JEL: O31, F43, C23
KeyWords: Innovation, Panel Cointegration, Error Correction Mechanism
Creation-Date: 20030730
Handle: RePEc:cda:wpaper:13