2015/02/24 by Diego-Ivan Ruge-Leiva, Ruge-Leiva, Diego-Ivan
Economics, Econometrics and Finance · #Economic Growth and Productivity #FOS: Economics and business #General Economics (econ.GN)
paper · doi:10.48550/arxiv.1502.06805
openalex publication_date 2015/02/24 · openalex created_date 2024/04/10 · openalex updated_date 2026/07/28
Studies which are based on Coe and Helpman (1995) and use weighted foreign R&D variables to estimate channel-specific R&D spillovers disregard the interaction between international R&D spillovers and other unobserved common spillovers and shocks. Using a panel of 50 economies from 1970-2011, we find that disregarding this interaction leads to inconsistent estimates whenever knowledge spillovers and other unobserved effects are correlated with foreign and domestic R&D. When this interaction is modeled, estimates are consistent; however, they confound foreign and domestic R&D effects with unobserved effects. Thus, the coefficient of a weighted foreign R&D variable cannot capture genuine channel-specific R&D spillovers.