Financial Development, Economic Growth and R&D Cyclical Movement

Ka Wai Terence Fung; Chi Keung Lau

Financial Development, Economic Growth and R&D Cyclical Movement

Ka Wai Terence Fung, Chi Keung Lau

Research output: Contribution to journal › Article › peer-review

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 language	English
Number of pages	12
Journal	Journal of Applied Economics and Business Research
Volume	3
Issue number	3
Publication status	Published - 2013
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

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Cite this

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title = "Financial Development, Economic Growth and R\&D Cyclical Movement",

abstract = "This paper builds up an endogenous growth model {\`a} 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.",

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AU - Fung, Ka Wai Terence

AU - Lau, Chi Keung

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AB - 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.

KW - Endogeneous growth model

KW - real business cycle

KW - research and development

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VL - 3

JO - Journal of Applied Economics and Business Research

JF - Journal of Applied Economics and Business Research

IS - 3

ER -

Financial Development, Economic Growth and R&D Cyclical Movement

Abstract

UN SDGs

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