R&D, Innovation and Knowledge Spillovers: A Reappraisal of Bottazzi and Peri (2007) in the Presence of Cross-Sectional Dependence

This is the authors' abstract. We don't add key points for this paper.

Bottazzi and Peri (Economic Journal 2007; 117: 486–511) show the existence of a cointegrating relationship between the domestic stock of knowledge, domestic R&D and the international knowledge stock for a panel of OECD countries and interpret it as evidence supporting the semi-endogenous versus the endogenous growth theory. We replicate the baseline specification of their study and we show that main results are robust to the use of a different estimation strategy (Bai et al., Journal of Econometrics 2009; 149: 82–99) that duly takes into account cross-sectional correlation: interestingly, in this case we also find a larger role for knowledge spillovers.