Cardiff University | Prifysgol Caerdydd ORCA
Online Research @ Cardiff 
WelshClear Cookie - decide language by browser settings

Testing a model of UK growth: a role for R&D subsidies

Minford, Lucy and Meenagh, David 2019. Testing a model of UK growth: a role for R&D subsidies. Economic Modelling 10.1016/j.econmod.2019.01.002
Item availability restricted.

[img] PDF (updated) - Accepted Post-Print Version
Restricted to Repository staff only until 29 January 2020 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

Download (353kB)

Abstract

R&D is a main driver of growth, whether by generating new ideas for production or increasing technological transfer. However, R&D itself is risky and faces numerous barriers which may reduce its marginal return. Direct R&D subsides are intended to counteract such barriers, but whether they lead empirically to increased economic growth is unclear. In our structural model of the UK, subsidies offset the frictional costs associated with R&D, incentivising innovation and so stimulating productivity growth. We estimate and test this structural model by indirect inference, a method not previously used in work on R&D. We find that even temporary cuts to R&D funding have long-lasting impacts on UK economic growth. The power of the test allows us to calculate tight accuracy bounds for our results and for policy reform impacts calculated using the model. These findings are of high relevance to the ongoing debate around the future UK innovation environment.

Item Type: Article
Date Type: Published Online
Status: In Press
Schools: Business (Including Economics)
Publisher: Elsevier
ISSN: 0264-9993
Date of First Compliant Deposit: 24 January 2019
Date of Acceptance: 12 January 2019
Last Modified: 29 Jan 2019 12:20
URI: http://orca.cf.ac.uk/id/eprint/118663

Actions (repository staff only)

Edit Item Edit Item

Downloads

Downloads per month over past year

View more statistics