Further considerations on the link between adjustment costs and the productivity of R&D investment: evidence for Spain

• Desiderio Romero-Jordán ^[1] ; José Félix Sanz-Sanz ^[2] ; Inmaculada Álvarez-Ayuso ^[3]
  1. [1] Universidad Rey Juan Carlos
  2. [2] Universidad Complutense
  3. [3] Universidad Autónoma de Madrid

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• Localización: Notas técnicas: [continuación de Documentos de Trabajo FUNCAS], ISSN-e 1988-8767, Nº. 291, 2006
• Idioma: inglés
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• Resumen

  • This paper constructs a dynamic model to estimate the impact of adjustment costs on the productivity of investment in R&D. In order to take into account the possible endogeneity of adjustment costs, the model is estimated by means of Instrumental Variables (IV), using a panel of Spanish companies. The results show that the elasticity of the productivity of R&D investment with regard to adjustment costs is high, with a value close to 1 (-0.96). This confirms that it is essential to include adjustment costs in the empirical analysis of R&D productivity, as suggested by Jones and Williams (1998) and Comin (2003, 2004).