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I would like to thank Eric Bartelsman, Charles Beach, Paul Beaudry, Jean Boivin, Allen Head, Hugo Hopenhayn, Hashmat Khan, Per Krussell, Huw Lloyd-Ellis, Bentley MacLeod, Leonard Nakamura, Daniel Trefler for their very helpful insight and constructive criticism, Raven Saks for providing the executive compensation data, Carol Corrado for providing the intangible expenditure data and seminar participants at Laval University, Queen’s University, University of New Orleans and Wilfrid Laurier University for their helpful comments.
A consensus emerged overtime among national accountants on what those items should be. See Vosselman (1998).
See Belhocine (2009a) for an exhaustive list and a description of specific items included in each group.
These potential specification problems are mentioned in a related discussion by Hall (2004) pp. 914-915. See the conclusion section for an elaboration on this point.
Other studies confirmed the long implied adjustment period. See Chirinko (1993) for a review of the literature. However, more recent work which uses natural experiments, exemplified by the papers of Cummins et al. (1994) and Cummins et al. (1996) have found shorter adjustment periods.
Some R&D spending leads to the creation of a patent which will carry a price if commercialized. However, the market for patents is extremely thin: very few patents change hands. For example, Serrano (2006) documents that only about 20 percent of all U.S. patents issued to small innovators (i.e., firms that were issued no more than five patents in a given year) are traded once or more.
Note that the calibration of all starting values of the varying parameters is detailed in Appendix C.