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Federal research spending and innovation in the U.S. economy

Authors
Journal
Journal of Policy Modeling
0161-8938
Publisher
Elsevier
Volume
36
Issue
3
Identifiers
DOI: 10.1016/j.jpolmod.2014.01.010
Keywords
  • Federal Spending
  • Patents
  • Disaggregated Marshallian Macroeconomic Model
  • Bass Diffusion Model
  • Transfer Functions
Disciplines
  • Economics

Abstract

Abstract This paper provides a better understanding of federal funding and its impact on the production process of patentable ideas in the U.S. economy. In this study, I develop an expansion of the Marshallian Macroeconomic Model (Ngoie and Zellner, 2012, forthcoming), which is applied to the U.S. science sector and, among other things, compare the return of federal spending on the three components of research activities mainly (1) basic research, (2) applied research, and (3) development research. The findings presented in this study clearly outline that federal funding channeled toward applied research carries a much larger return than research funding assigned to basic or development research. The return on research spending is measured using the number of patents awarded. Furthermore, this study investigates the transformation of patented ideas into new products and the related implications on sectoral economic growth.

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