The Long-Run Growth Effects of R & D Subsidies

  title={The Long-Run Growth Effects of R & D Subsidies},
  author={Paul S. Segerstrom},
  • Paul S. Segerstrom
  • Published 2000
This paper presents a model of R&D-driven growth without scale e®ects where ̄rms can engage in both horizontal and vertical R&D activities. Unlike in earlier models of R&D-driven growth without scale e®ects by Jones (1995), Segerstrom (1998) and Young (1998), R&D subsidies can have long-run growth e®ects. Indeed, for a wide range of parameter values, a permanent increase in the R&D subsidy rate decreases the long-run rate of economic growth. An intuitive explanation for why R&D subsidies can… CONTINUE READING
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