The financing of R&D

This project will contribute to the literature in three important domains. First, it will amount to developing a new econometric estimator, the multi-degree censored regression model. This model can be applied to the context of financial constraints to innovation. While the current literature mostly revolves around how to identify financial constraints for innovation, the new econometricestimator serves a different purpose: it allows to focus on the estimation of the implications of financial constraints, e.g. in terms of forgone R&D investment in an economy or forgone jobs in corporate research and development. Second, treatment effects of the financial crisis will be estimated with respect to R&D investment. The exogenous shock of the crisis in combination with unique data on the financing of R&D at the firm level in combination with banking-related data will allow to estimate the consequences of new bank behavior in the aftermath of the financial crisis. It will be shown that abandoning risky banking is not necessarily beneficial for innovation-related investments. Third, new policy instruments based on subordinated loans for R&D will be evaluated.Thus the proposed project may have impacts in three distinct domains: applied econometrics, empirical finance and in the field of public policy for innovation.

Keywords:R&D

Disciplines:Applied economics, Economic history, Macroeconomics and monetary economics, Microeconomics, Tourism