TY  - JOUR
AU  - David,Paul A.
AU  - Hall,Bronwyn H.
TI  - Heart of Darkness: Modeling Public-Private Funding Interactions Inside the R&D Black Box
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7538
PY  - 2000
Y2  - February 2000
UR  - http://www.nber.org/papers/w7538
L1  - http://www.nber.org/papers/w7538.pdf
N1  - Author contact info:
Paul David
Prof. Paul A. David
Oxford Internet Institute
1 St. Giles'
Oxford OX1 3SJ
United Kingdom
Tel: 44(0)1865249021
Fax: 44(0)1865287209
E-Mail: pad@stanford.edu

Bronwyn H. Hall
Dept. of Economics
549 Evans Hall
UC Berkeley
Berkeley, CA 94720-3880
Tel: 510/642-3878
Fax: 510/548-5561
E-Mail: bhhall@nber.org
AB  - This paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private R&D expenditures, and their joint effects on the economy. Econometric studies in this area report a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed R&D to changes in the level and nature of public R&D expenditure, but the necessary theoretical framework within which the empirical results can be interpreted is seldom provided. A major cause of  inconsistencies' in the empirical literature is the failure to recognize key differences among the various policy  experiments' being considered depending upon the economy in which they are embedded, and the type of public sector R&D spending that is contemplated. Using a simple, stylized structural model, we identify the main channels of impact of public R&D. We thus can characterize the various effects, distinguishing between short-run and long-run impacts that would show up in simple regression analyses of nominal public and private R&D expenditure variables. Within the context of our simple model it is possible to offer interpretations that shed light on recent cross-section and panel data findings at both high (i.e. national) and low (specific technology area) levels of aggregation.
ER  -