Financial Development, Economic Growth and R&D Cyclical Movement

Fung, Ka Wai and Lau, Chi Keung (2013) Financial Development, Economic Growth and R&D Cyclical Movement. Journal of Applied Economics and Business Research, 3 (3). pp. 133-145. ISSN 1927-033X

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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.

Item Type: Article
Uncontrolled Keywords: Endogeneous growth model, real business cycle, research and development
Subjects: L100 Economics
Department: Faculties > Business and Law > Newcastle Business School > Business and Management
Related URLs:
Depositing User: Chi Keung Lau
Date Deposited: 04 Nov 2013 08:18
Last Modified: 04 Dec 2015 13:06
URI: http://nrl.northumbria.ac.uk/id/eprint/14466

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