• Graduate program
    • Courses
    • Why Tinbergen Institute?
    • Program Structure
    • Course Registration
    • Recent PhD Placements
    • Admissions
    • Facilities
  • Research
  • News
  • Events
    • Events Calendar
    • Tinbergen Institute Lectures
    • Annual Tinbergen Institute Conference
    • Events Archive
    • Crash Course in Experimental Economics
    • Behavioral Macro and Complexity
    • Introduction in Genome-Wide Data Analysis
    • Econometric Methods for Forecasting and Data Science
  • Times

van Ophem, H., van Giersbergen, N., van Garderen, K.J. and Bun, M. (2019). The cyclicality of R&D investment revisited Journal of Applied Econometrics, 34(2):315--324.


  • Journal
    Journal of Applied Econometrics

In Fabrizio and Tsolmon (Review of Economics and Statistics, 2014, 96(4), 662–675) and Barlevy (American Economic Review, 2007, 97(4), 1131–1164) it was concluded that R&D investments are procyclical. Fabrizio and Tsolmon utilized a model based on Barlevy, but it differed in some respects and allowed for more heterogeneity. However, we doubt whether their implied trends are intended. Fabrizio and Tsolmon also set missing values for R&D equal to zero, leading to unrealistic jumps in investment and its first differences. We reconcile and replicate both the Fabrizio and Tsolmon and Barlevy papers by considering extensions that encompass both models. Furthermore, we treat missing values more appropriately and consider some alternative specifications to check the robustness of the results. Procyclicality is confirmed, but we find much less heterogeneity than Fabrizio and Tsolmon did. In particular, obsolescence and patent effectiveness are no longer important but external financing is.