A large empirical literature reports estimates of the rate of return to R&D ranging from 30% to over 100%, supporting the notion that there is too little private investment in research. This conclusion is challenged by the new growth theory. We derive analytically the relationship between the...

Research and development (R&D) is a key determinant of long run productivity and welfare. A central issue is whether a decentralized economy undertakes too little or too much R&D. We develop an endogenous growth model that incorporates parametrically four important distortions to R&D: the...

Research and development (Ramp;D) is a key determinant of long run productivity and welfare. A central issue is whether a decentralized economy undertakes too little or too much Ramp;D. We develop an endogenous growth model that incorporates parametrically four important distortions to Ramp;D:...