Financial Development, Economic Growth and R&D Cyclical Movement

Ka Wai Terence Fung, Chi Keung Lau

Research output: Contribution to journalArticle

Abstract

This paper builds up an endogenous growth model à la Aghion and Howitt (1992) and Boucekkine et al (2005). We assume that R&D firms use only investment good as input, instead of final good as hypothesized in the above two models. We show that investment price will be a negative function of aggregate quality index; and thus decline over time. In this model, subsidy on R&D has growth-enhancing effect. Moreover, this model predicts unambiguously that R&D is procyclical.
Original languageEnglish
Number of pages12
JournalJournal of Applied Economics and Business Research
Volume3
Issue number3
Publication statusPublished - 2013
Externally publishedYes

    Fingerprint

Cite this