Working Paper

R&D spending and cyclical fluctuations: putting the \"technology\" in technology shocks

Abstract: We examine the dynamic properties of an endogenous growth model with an explicit R&D sector in order to evaluate its ability to propagate temporary disturbances into persistent fluctuations in macroeconomic variables. We demonstrate that a large proportion of the variability and persistence of measured Solow residuals can be thought of as reflecting the endogenous accumulation and adaptation of technical knowledge rather than simply exogenous processes. By explicitly modeling R&D, we use a framework in which it is possible to explicitly consider the role of technology in \"technology shocks.\"

Keywords: Research and development;

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 1998

Number: 1998-020