Does Macroeconomic Policy Affect Private Savings in Europe?: Evidence from a Dynamic Panel Data Model

Mechthild Schrooten and Sabine Stephan ()

No 431, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This note explores the relationship between the price elasticity of demand and the R&D intensity of the product. We introduce the concept of R&D intensity into a standard Dixit-Stiglitz/Krugman-type setting. R&D activity is treated as a fixed cost of production. Within this framework, sectors with a higher R&D intensity show a lower price elasticity of demand. This proposition is confirmed by an empirical investigation of export demand for manufactured goods from major industrialised countries. Consequently, real exchange rate changes have an impact on the commodity structure of exports.

Keywords: Dynamic panel data model; Private savings; European Union; GMM estimator (search for similar items in EconPapers)
JEL-codes: C33 E21 (search for similar items in EconPapers)
Pages: 24 p.
Date: 2004
New Economics Papers: this item is included in nep-eec
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