Policy effect: A study of the impact of research & development expenditures on the relationship between Total Factor Productivity and US Gross Domestic Product performance.

摘要

This study is focused on the hypothesis that technological investment drives growth and performance of the U.S. economy. A model is proposed for testing the relationship of Total Factor Productivity and Gross Domestic Product at the nation level (US). It further hypothesizes that the relationship may be more complex than a simple regression could reveal and spurious variables may influence outcomes. Research & Development expenditures have been selected as a logic-supported spurious variable. A model is proposed to test the key hypothesis. Using aggregate data, regression and mediation (Baron & Kenny, 1986) are employed as normative methodological tests.;The central theory supporting this research is the theory of Total Factor Productivity, as first proposed by Solow (1957) and later supported by most economists. There are three relationships of interest espoused by this theory. The first relationship is that of Total Factor Productivity to Gross Domestic Product (Mansfield et al., 1977; Mohnen, 1992). The second is the relationship of interest is Total Factor Productivity to Research & Development expenditures (BEA, 2006). The third relationship of interest is Research & Development expenditures to Gross Domestic Product (Mansfield, 1968; Mansfield, 1980; Griliches, 1980; Terleckyj, 1980).;The results of the study point to Research & Development expenditures as mediating the relationship between Total Factor Productivity to Gross Domestic Product. This result would indicate the possibility of constructing a multivariate model that could better clarify the relationships that serve as drivers of Gross Domestic Product.