We examine the 'home bias' of international knowledge spillovers as measured by the speed of patent citations (i.e. knowledge spreads slowly over international boundaries). We present the first compelling econometric evidence that the geographical localization of knowledge spillovers has fallen over time, as we would expect from the dramatic fall in communication and travel costs. Our proposed estimator controls for correlated fixed effects and censoring in duration models and we apply it to data on over two million citations between 1975 and 1999. Home bias declines substantially when we control for fixed effects: there is practically no home bias for the more 'modern' sectors such as pharmaceuticals and information/communication technologies.
Authors
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
Research Fellow Columbia University
Sokbae is an IFS Research Fellow and a Professor at Columbia University, with an interest in Econometrics, Applied Microeconomics and Statistics.
John Van Reenen
Report details
- Publisher
- CEPR
Suggested citation
R, Griffith and S, Lee and J, Van Reenen. (2007). Is distance dying at last? Falling home bias in fixed effects models of patent citations. London: CEPR. Available at: https://ifs.org.uk/publications/distance-dying-last-falling-home-bias-fixed-effects-models-patent-citations-0 (accessed: 19 May 2024).
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