R&D, Investment and Industry Dynamics / Saul Lach, Rafael Rob.

Format:

Book

Author/Creator:

Lach, Saul.

Contributor:

National Bureau of Economic Research.

Rob, Rafael.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4060.

NBER working paper series no. w4060

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

We present a model of industry evolution where the dynamics are driven by a process of endogenous innovations, followed by subsequent embodiments in physical capital. Traditionally, the only distinction between R&D and physical investment was one of labeling: the first process accumulates an intangible stock (knowledge) while the second accumulates physical capital; both stocks affect output in a symmetric fashion. We argue that the story is not that simple, and there is more to it than differences in the object of accumulation. Our model stresses the causal relationship between past R&D expenditures and current investments in machinery and equipment. This causality pattern, which is supported by the data, also explains the observed higher volatility of physical investment (relative to R&D expenditures).

Notes:

Print version record

April 1992.