Gil, Pedro MazedaBrito, PauloAfonso, Oscar2024-03-182024-03-182013Gil, Pedro Mazeda; Paulo Brito and Oscar Afonso .(2013). “Growth and firm dynamics with horizontal and vertical R&D”. Macroeconomic Dynamics, Volume 17, No. 7: pp. 1438–1466. (Search PDF in 2024).1365 - 1005http://hdl.handle.net/10400.5/30430A negative or nonsignificant empirical correlation between aggregate R&D intensity and the economic growth rate is a well-known fact in the empirical growth literature, but scarcely addressed in the theoretical growth literature. This paper develops an endogenous-growth model that explores the interrelation between horizontal and vertical R&D under a lab-equipment specification that is consistent with that stylized fact. A key feature is that the growth rate is fully endogenous both on the intensive and on the extensive margin. Strong composition effects between horizontal and vertical R&D, along both transition and the balanced-growth path, then emerge as the main mechanism producing those results. This setting also allows us to obtain a relationship between economic growth and firm dynamics that is consistent with the empirical facts.engEndogenous GrowthVertical and Horizontal R&DFirm DynamicsPiecewise Smooth Dynamicsjournal articledoi:10.1017/S1365100512000181