Dynamics of R&D and Investment in the Scientific Sector.

Saul Lach*, Mark Schankerman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


This paper empirically explores the dynamic interactions among research and development, capital investment, and the stock market performance of 191 firms in science-based industries during the period 1973-81. Using a framework based on dynamic factor analysis, we test asymmetric specifications of the dynamics between R & D and investment. The data indicate that R & D Granger-causes investment but that investment does not Granger-cause R & D. We discuss interpretations of this causal ordering, characterize the stylized facts of the movements over time of R & D and investment, and measure the stock market valuation of these movements.
Original languageEnglish
Pages (from-to)880-904
Number of pages25
JournalJournal of Political Economy
Issue number4
StatePublished - 1 Aug 1989


  • Science & industry
  • Capital investments
  • Stock exchanges
  • Business enterprises
  • Investments
  • Research & development
  • Factor analysis


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