The Impact of Business Cycle on Input and Output of Innovation Activity in EU Countries
The Impact of Business Cycle on Input and Output of Innovation Activity in EU Countries

Summary/Abstract: The effect of business cycle on innovation activity of economic entities is ambiguous. There are both studies confirming pro-cyclical and as well as counter-cyclical pattern of innovation activity input, while the output of innovation activity is mainly considered procyclical. This study aims to analyze the impact of business cycle phases on input and output of innovation activity of economic agents. It uses the data for 26 EU countries and Norway in 2002-2016. The research applies panel data models for input and output of innovation activity with the business cycle indicators as explanatory variables. The findings confirm the complex relationship between innovation performance and business cycles, and they mostly support the pro-cyclical nature of R&D expenditures and patent grants.

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