Models of R&D-induced growth: An empirical investigation

In the first essay, I use data for U.S. manufacturing industries to estimate a system implied by a model of R&D-induced growth. This model delineates the relationships among R&D intensity, the rate of patenting, technological change, and output growth. Regressing the rate of patenting on R&D intensity lags, technological change on rate of patenting and R&D intensity lags, and output growth on technological change lags, should give nonzero sums of the slope coefficients in this endogenous growth framework. A zero sum of slope coefficients for any of the three equations in the system would imply non-rejection of the null hypothesis that growth is not induced by R&D. I find evidence of positive long-run impact of the explanatory variables for all equations. The null hypothesis that growth is not induced by R&D is therefore rejected for U.S. manufacturing. Moreover, I find evidence of technological spillovers from aggregate research intensity to industry-level economic performance, as well as evidence for long lags between innovative activity and output growth. Finally, the theoretically implied system estimation is more efficient and often provides quite different estimates than the estimation of single equations.;In the second essay, I use data for a group of OECD countries to estimate a somewhat modified version of the system of equations estimated in the first essay. This system interrelates R&D intensity, productivity growth, and output growth. I obtain results similar to those for the United States. The estimates are bigger for aggregate data compared to industry-level data.;In the final essay, I present a model with a sector whose R&D expenditures induce technological progress for the domestic economy. Productivity differences across countries are predicted to have a negative relation with cross-country price differences of manufacturing goods. An extension which considers a non-tradeables sector, implies instead a positive relation between cross-country productivity and price differences. Using absolute price data for six European countries, I find that countries with higher R&D stocks have a higher relative price of non-tradeable to tradeables. I also find that the high productivity countries have lower prices for traded goods. Thus, in contrast to the Balassa-Samuelson hypothesis, the overall price level might be lower in the most productive country since tradeables prices are not equalized.