NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Back to Basics: Basic Research Spillovers, Innovation Policy and Growth

Ufuk Akcigit, Douglas Hanley, Nicolas Serrano-Velarde

NBER Working Paper No. 19473
Issued in September 2013
NBER Program(s):   EFG   IO   PR

This paper introduces a model of endogenous growth through basic and applied research. Basic research differs from applied research in the nature and the magnitude of the generated spillovers. We propose a novel way of empirically identifying these spillovers and embed them in a general equilibrium framework with private firms and a public research sector. After characterizing the equilibrium, we estimate our model using micro-level data on research expenditures by French firms. Our key finding is that standard R&D policies can accentuate the dynamic misallocation in the economy. We also find a strong complementarity between the property rights of basic research and the optimal funding of public research.

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Document Object Identifier (DOI): 10.3386/w19473

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