Theories of endogenous growth have recently explored the role of inter
national R&D spillovers. This study extends Coe and Helpman's model (C
oe, D. T. and Helpman, E., 1995, International R&D spillovers, Europea
n Economic Review, 39, 859-87) allowing for country-specific spillover
effects using interactive dummy variables, by netting out the impact
of productivity catch-up, and by including a business cycle variable.
The empirical results suggest a diverse picture. For some countries, e
.g. the USA, Canada and West Germany, recent spillovers seem to have a
negative impact on TFP. Hypotheses are suggested to explain the resul
ts.