@techreport{NBERw2377,
 title = "The Interaction Between Capital Investment and R&D in Science-Based Firms",
 author = "Saul Lach and Mark Schankerman",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "2377",
 year = "1987",
 month = "August",
 URL = "http://www.nber.org/papers/w2377",
 abstract = {This paper analyzes the interaction among R&D, capital investment , and the stock market rate of return for 191 firms in science-based industries for the period 1973-1981. Using a framework based on dynamic factor analysis, we show how several prominent hypotheses about the determination of R&D and investment generate testable parameter restrictions. The data indicate that R&D Granger-causes investment, but that investment does not Granger-cause R&D. We use this finding to examine the validity of those hypotheses, to characterize the movements over time of R&D and investment, and to measure the stock market valuation of these movements.},
}