Uncertainty and the dynamics of R&D / Nick Bloom Bloom, Nick

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Author
Bloom, Nick
Subjects
R&D - Uncertainty - Real options
Summary
Uncertainty varies strongly over time, rising by 50% to 100% in recessions and by up to 200% after major economic and political shocks. This paper shows that higher uncertainty reduces the responsiveness of R&D to changes in business conditions--a "caution-effect"--making it more persistent over time. Thus, uncertainty will play a critical role in shaping the dynamics of R&D through the business cycle, and its response to technology policy. I also show that if firms are increasing their level of R&D then the effect of uncertainty will be negative, while if firms are reducing R&D then the effect of uncertainty will be positive.
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http://trove.nla.gov.au/work/5504282
Work ID
5504282

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