Economic policy uncertainty, R&D expenditures and innovation outputs

Abstract

Purpose

The purpose of this study is to examine the relationship between the news-based economic policy uncertainty (EPU), research and development (R&D) expenditures per capita and innovation outputs.

Design/methodology/approach

Data from 1996 to 2015 for 19 countries (Australia, Brazil, Canada, Chile, China, France, Germany, India, Ireland, Italy, Japan, Netherlands, Russia, Singapore, South Korea, Spain, Sweden, the United Kingdom and the United States) are used. The authors apply country and year fixed-effects models for the estimations.

Findings

The study findings show that higher levels of EPU are positively associated with higher R&D expenditures per capita as well as innovation outputs (patent applications, patent grants and trademark applications).

Practical implications

This study deepens our understanding on the policy uncertainty–economic activities nexus and expands the literature on uncertainty, which is still at an initial phase of development, leading to generate a variety of open research questions for further investigation and study (Bloom, 2014).

Originality/value

There has not been an empirical investigation on the links between EPU and R&D expenditures and innovation outputs across several countries. The authors address this gap in the literature.

Citation

Tajaddini, R. and Gholipour, H.F. (2021), "Economic policy uncertainty, R&D expenditures and innovation outputs", Journal of Economic Studies, Vol. 48 No. 2, pp. 413-427. https://doi.org/10.1108/JES-12-2019-0573