DOES SCIENTIFIC AND TECHNICAL RESEARCH REDUCE MACROECONOMIC VOLATILITY?

ABSTRACT: This paper explores whether conducting scientific and technical (S&T) research reduces the volatility of output growth. The paper finds robust evidence that output volatility is significantly lowered by a country's production of S&T publications. The results show that the effect of S&T publications on output volatility is particularly strong in middle‐income, OECD and other high‐income countries. However, for East‐Asian, low‐income and sub‐Saharan African countries the effect is either weak or absent. These results provide strong evidence that not only OECD and other high‐income countries are actively engaged in S&T research, emerging developing countries are also conducting S&T research, which is effective in reducing output volatility. The results are robust to adding a host of control variables, various subsamples and different estimation techniques. [ABSTRACT FROM AUTHOR]