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Macroeconomic Effects of Public R&D

De Lipsis, Vincenzo; Deleidi, Matteo; Mazzucato, Mariana; Agnolucci, Paolo; (2023) Macroeconomic Effects of Public R&D. (Working Paper Series 2023-02). UCL Institute for Innovation and Public Purpose: London, UK. Green open access

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Abstract

The direct public funding of R&D investment to stimulate technological innovation has a strong theoretical case and has gained renewed attention in the recent policy debate as a way to address the long-term challenges of modern society such as pandemics, climate change, and the transition to a low-carbon economy. We estimate the dynamic macroeconomic effects of government R&D investment and we find that it is very effective in fostering the total national innovation effort, crowding in private R&D investment, and in raising aggregate output in the long run. We also find that the public stimulus goes beyond private R&D activities and involves a very strong expansion of overall economic activity since the early periods. Finally, we uncover a strong positive impact of the private sector’s anticipation of public R&D spending, which can be interpreted as a confirmation of the importance of managing expectations to reduce the uncertainty inherent to R&D activities.

Type: Working / discussion paper
Title: Macroeconomic Effects of Public R&D
Open access status: An open access version is available from UCL Discovery
Publisher version: https://www.ucl.ac.uk/bartlett/public-purpose/wp20...
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/10196131
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