Do spillovers matter when estimating private returns to R&D?

Eberhardt, Markus; Helmers, Christian; Strauss, Hubert

Abstract

A large body of literature estimates private returns to R&D adopting the Griliches knowledge production framework, which ignores the potential impact of spillovers on consistent estimation. Using a panel of twelve manufacturing industries across ten OECD economies, we investigate whether ignoring spillovers leads to bias in the estimated private returns to R&D. We compare results from a common factor framework, which accounts for spillovers and other unobserved shocks, to those from a standard Griliches approach. Our findings confirm that conventional estimates conflate own-R&D and spillover effects, implying that spillovers cannot be ignored even when the interest lies exclusively in evaluating private returns to R&D. © 2013 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Citation

Eberhardt, M., Helmers, C., & Strauss, H. (2013). Do spillovers matter when estimating private returns to R&D?. Review of Economics and Statistics, 95(2), 436-448. https://doi.org/10.1162/REST_a_00272

• Journal Article Type: Article
• Acceptance Date: Aug 10, 2011
• Online Publication Date: May 1, 2013
• Publication Date: May 1, 2013
• Deposit Date: Mar 26, 2021
• Journal: Review of Economics and Statistics
• Print ISSN: 0034-6535
• Electronic ISSN: 1530-9142
• Publisher: Massachusetts Institute of Technology Press
• Peer Reviewed: Peer Reviewed
• Volume: 95
• Issue: 2
• Pages: 436-448
• DOI: https://doi.org/10.1162/REST_a_00272
• Public URL: https://nottingham-repository.worktribe.com/output/3182502
• Publisher URL: https://direct.mit.edu/rest/article/95/2/436/58080/Do-Spillovers-Matter-When-Estimating-Private