Working Paper #2025-017
Endogenous R&D elasticities of productivity functions and BERD bias: Explorations of functional coefficient regressions
Macroeconomic productivity is modelled as a Cobb-Douglas function of private and public R&D stocks in recent literature. The slope parameters of a growth rate version may change over time and with circumstances. Using the method of functional-coefficient regression, we show that human capital, GDP (per worker), services and defence R&D (both % GDP), lags of domestic and foreign private and public R&D, and lagged labour-augmenting technical change, all in growth rates, change the elasticities of productivity. The result is a panel data set of regression coefficients representing elasticities of productivity. Eventually, the panel average of the productivity elasticities of domestic and foreign private R&D goes to constant values; elasticities of public R&D go down slightly. This may contribute to an explanation of the productivity slowdown and why private R&D has been expanded relative to public R&D in recent years.
- Keywords
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- technical change
- private and public R&D substitution
- panel data
- changing elasticities of productivity
- functional coefficient regression
- productivity slowdown
- JEL codes
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- O33
- O47
Cite this as
APA 7th ed.Ziesemer, T. (2025). Endogenous R&D elasticities of productivity functions and BERD bias: Explorations of functional coefficient regressions (UNU-MERIT Working Paper No. 2025-017). UNU-MERIT. https://doi.org/10.53330/HGYA6809