On This PageNovember 2005, No. 220

Why Don't Recessions Encourage More R&D Spending?
Last Updated: 10/13/05
Economists sometimes argue that recessions promote activities that ultimately contribute to long-run growth. But evidence suggests research and development, one important source of economic growth, falls rather than rises during recessions, even for firms that do not appear to be credit constrained. The author discusses an alternative explanation for this pattern.