Abstract
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 language | English |
|---|---|
| Pages (from-to) | 880-904 |
| Number of pages | 25 |
| Journal | Journal of Political Economy |
| Volume | 97 |
| Issue number | 4 |
| DOIs | |
| State | Published - 1 Aug 1989 |
Keywords
- Science & industry
- Capital investments
- Stock exchanges
- Business enterprises
- Investments
- Research & development
- Factor analysis