Abstract
Public R&D stimulates domestic private and foreign private and public R&D, together enhancing technical change and thereby GDP. In this paper, we evaluate vector-error-correction model (VECM) estimations and simulations of a companion paper in regard to internal rates of return (and related aspects) to additional public R&D of OECD countries and compare them to the macroeconomic literature. We show (i) internal rates of return to public R&D shocks, and (ii) the related payback periods, gain/GDP ratios, and sums of discounted (at 4%) gains. Fourteen of 17 countries show high internal rates of return, short payback periods, and high gains/GDP ratios from positive public R&D shocks if projects are stopped when gains get negative. Three countries show crowding-out effects and require (initial) reductions of public R&D before showing positive results.
Original language | English |
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Article number | 164 |
Number of pages | 16 |
Journal | Economic Change and Restructuring |
Volume | 57 |
Issue number | 5 |
DOIs | |
Publication status | Published - 1 Oct 2024 |
Keywords
- Public R&D
- Growth
- VECM
- Internal rates of return
- PRODUCTIVITY INCREASE
- GROWTH
- SUBSIDIES