Government Support of Science and the Impact of the Crisis: The Case of the EU Countries
The paper investigates government R&D spending during the business cycle. When analyzing this expenditure, it is important to mention two opposing aspects: on the one hand, government spending on R&D can be seen as a stimulus measure for the government to mitigate the effects of the reces...
Main Authors: | , |
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Format: | Article |
Language: | English |
Published: |
Academy of Economic Studies of Bucharest
2022-11-01
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Series: | Amfiteatru Economic |
Subjects: | |
Online Access: | https://www.amfiteatrueconomic.ro/temp/Article_3157.pdf |
Summary: | The paper investigates government R&D spending during the business cycle. When
analyzing this expenditure, it is important to mention two opposing aspects: on the one hand,
government spending on R&D can be seen as a stimulus measure for the government to
mitigate the effects of the recession on the economy, – governments can decide to increase
public spending on R&D. However, on the other hand, the recession reduces public budget
revenues and prompts governments to reduce public spending, which very often negatively
affects R&D spending. Using panel data from 22 European Union countries for the period
2005 to 2019, we examine how government R&D expenditure varies over the business cycle.
Four estimates were performed in which explanatory variables were gradually added to the
model (OLS approach). The GMM approach includes all the variables at once. The
coefficient for government R&D expenditure is positive, high, and remains stable. This
implies that expenditure changes only gradually. The estimates give us evidence regarding
the pro-cyclical effect on government R&D expenditure and the Keynesian approach to
economic policy.
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ISSN: | 1582-9146 2247-9104 |