Using panel VAR to analyze international knowledge spillovers

Abstract

Technology diffusion often plays a critical role in models of trade and economic growth. Most existing empirical tests for international technology spillovers suggest some role for spillovers in explaining productivity growth. It has been relatively difficult, however, to identify separate roles for the direct and indirect channels of knowledge spillovers. The influence of these channels is often confounded owing to the focus on total‐factor productivity (TFP) and R&D spending within a cross‐section or panel data setting. This paper employs an alternative methodology to investigate the role of direct knowledge spillovers. Using citation‐weighted domestic patents, citation‐weighted foreign patents and value added for 14 U.S. manufacturing industries over the period 1977 to 2004 a panel VAR methodology is employed to investigate the dynamic role of direct and indirect knowledge spillovers. Evidence for the role of the direct knowledge spillovers channel is found—an increase in citation‐weighted patents abroad directly increases the measure of domestic citation‐weighted patents, after accounting for the influence of productivity/value added. The role of foreign innovative activity, however, is small relative to the role of U.S. innovative activity in explaining the dynamics of industry value added.

The Nexus between Economic Complexity and Energy Consumption under the Context of Sustainable Environment: Evidence from the LMC Countries

“…The Eigenvalue test performed above demonstrated that the PVAR model we built in this research is stable, because all four eigenvalues are inside or on the edge of the unity circle as shown in Table 7. As the VAR model belongs to the regime of an atheoretical model, which means it is unable to interpret the examined parameters [66][67][68][69][70]. Consequently, it is suggested to concentrate on analyzing impulse response functions and causality investigation.…”

“…As the VAR model belongs to the regime of an atheoretical model, which means it is unable to interpret the examined parameters [ 66 , 67 , 68 , 69 , 70 ]. Consequently, it is suggested to concentrate on analyzing impulse response functions and causality investigation.…”