R&D-expenditure in an endogenous growth model

The aim of this paper is to analyze the role that aggregate R&D-expenditure plays in economic growth. We introduce a technology of innovation based on expenditure that generates endogenous sustainable growth in absence of any scale effect. This R&D-model permits us to study the effects of some fiscal policies. In particular, we analyze how subsidies to R&D-investment and physical capital accumulation affect the long-run growth rate. For the empirical cross-country analysis we directly derive a structural econometric model.