Do Business Cycles Alter the Composition of Research and Development Expenditures?
Do business cycles cause firms to alter the composition of research and development (R&D) expenditures? This article uses aggregate data on U.S. firm-financed R&D expenditures during the 1956-96 period to address this issue. The mix of R&D expenditures changes over the business cycles with firms increasing the amount of basic R&D and reducing the amount of development R&D during recessions. Though the effects are small, the results raise the possibility that business cycles influence the rate of long-run growth. (JEL "E33", "O30") Copyright 2003 Western Economic Association International.
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