In this paper we study the incentives for basic-research investments by governments in a globalized world. For this purpose, we develop a two-country Schumpeterian growth model in which each country chooses its basic-research investments. We find that a country's basic-research investments...

Commodity price volatility is bad for macroeconomic performance. Virtually all empirical studies that document this negative relationship rely on the estimation of aggregate growth equations using cross-section evidence drawn from the post-1970 era. This paper uses a simulation model based on...