American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States
American Economic Journal: Macroeconomics
vol. 8,
no. 2, April 2016
(pp. 45–84)
Abstract
Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. In a theoretical model, we first show that a shift in the composition of public purchases toward high-tech products translates into higher economy-wide returns to innovation, leading to an increase in the aggregate level of private R&D. Using unique data on federal procurement in US states and performing panel fixed-effects estimations, we find support for the model's prediction of a positive R&D effect of the technological content of government procurement. Instrumental-variable estimations suggest a causal interpretation of our findings. (JEL H57, H76, O31, O32, O38)Citation
Slavtchev, Viktor, and Simon Wiederhold. 2016. "Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States." American Economic Journal: Macroeconomics, 8 (2): 45–84. DOI: 10.1257/mac.20130069Additional Materials
JEL Classification
- H57 National Government Expenditures and Related Policies: Procurement
- H76 State and Local Government: Other Expenditure Categories
- O31 Innovation and Invention: Processes and Incentives
- O32 Management of Technological Innovation and R&D
- O38 Technological Change: Government Policy
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