# 101. A Maximum entropy approach to the identification of productive technology spillovers

ESTEBAN FERNÁNDEZ VÁZQUEZ – BART LOS. 2007. A MAXIMUM ENTROPY APPROACH TO THE IDENTIFICATION OF PRODUCTIVE TECHNOLOGY SPILLOVERS. Pellervo Economic Research Institute Working Paper No. 101. p. 25. Pellervon taloudellisen tutkimuslaitoksen työpapereita nro 101. 25 s. ISBN 978-952-5594-72-0 (NID), ISBN 978-952-5594-73-7 (PDF), ISSN 1455 4623 (NID), ISSN 1796-4784 (PDF).

ABSTRACT: R&D activities by one industry often have positive effects on the productivity performance of other industries, as a consequence of technology spillovers. Econometric problems (such as multicollinearity), however, have prevented researchers from identifying the industries that have been responsible for the most important technology spillovers. This paper proposes an alternative estimation approach (Generalized Maximum Entropy econometrics), which can cope with datasets characterized by a high degree of multicollinearity. For a number of industries, rates of return to R&D expenditures by other industries are estimated on a bilateral basis. Furthermore, productivity effects of spillovers from the foreign counterparts of the industry are estimated. The analysis is done for eighteen industries in twelve OECD countries in the period 1976-1999.

Key words: labor productivity growt, R&D, technology spillovers, maximum entropy estimation