INTRODUCTION

This chapter reviews dynamic structural econometric models with both continuous and discrete controls, and those with market interactions. Its goal is to highlight techniques which enable researchers to obtain estimates of the parameters of models with these characteristics, and then use the estimates in subsequent descriptive and policy analysis. In an attempt to increase the accessibility of structural modelling, emphasis has been laid on estimation techniques which, though consistent with the underlying structural model, are computationally simple. The extent to which this is possible depends on the characteristics of the applied problem of interest, so the chapter ends up covering more than one topic. To help the reader who has more focussed interests, we now provide an outline of what can be found in the various subsections of the chapter.

Section 2 introduces the examples used to illustrate the points made in the chapter. We begin with single-agent problems involving continuous, as well as discrete, controls, and later place the agent explicitly into a market setting. The availability of continuous controls raises the possibility of using stochastic Euler equations to estimate some of the parameters of the model, and section 3 begins the substantive discussion of the chapter by considering this possibility.

Introduction

In this paper we present an overview of a series of studies pursued at the NBER during the last decade which used patent statistics to study different aspects of the economics of technological change. It consists of five substantive sections: a description of our firm level data; a report on the relationship between R&D expenditures and the level of patenting; a report on the relationship between patents, the stock market value of firms, and their R&D expenditures; a summary of work on the estimation of the value of patent rights based on patent renewal data; and a description of the use of patent data to estimate the importance of R&D spillovers. A brief set of conclusions closes the paper.

The NBER R&D data base and the growth of US firms in the 1970s

A major achievement of the NBER project has been the development and construction of a large data set covering the economic and technological performance of most publicly traded US manufacturing companies from the early 1960s through the early 1980s. It is the result of a detailed match of publicly available sales, employment, investment, R&D, and balance sheet information from the Compustat tapes (based on company 10–K filings with the SEC) with data acquired from the US Patent Office on patents issued to all organizations between 1969 and 1982.