Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/257126 
Year of Publication: 
2020
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 8 [Issue:] 4 [Article No.:] 77 [Publisher:] MDPI [Place:] Basel [Year:] 2020 [Pages:] 1-25
Publisher: 
MDPI, Basel
Abstract: 
We analyze the dynamic interaction of Japan's total factor productivity, gross domestic product (GDP) domestic and foreign private and public research and development (R&D) in vector-error-correction models (VECMs) for Japan with data from 1963-2017. Extensive testing leads to favoring a model with five cointegrating equations for the six variables. Analysis of effects of permanent policy changes shows that (i) additional public R&D encourages private R&D and total factor productivity (TFP), and has higher internal rates of return than private R&D changes and therefore could speed up Japan's growth; (ii) public R&D changes have a statistically significant positive permanent effect on foreign private R&D stocks and a transitional effect on foreign public R&D stocks; (iii) private R&D changes have a statistically significant positive permanent effect on foreign public R&D stocks and a transitional effect on foreign private R&D stocks; (iv) after a temporary GDP change, public R&D is counter-cyclical in the short and medium run and private R&D is pro-cyclical. Empirical results are related to the parameters of a VES (variable elasticity of substitution) function for TFP production.
Subjects: 
public and private R&D
productivity
growth
spillovers
vector-auto-regression/error-correction (VAR/VECM)
JEL: 
F43
O19
O47
O53
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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