Data.7z

This study test whether the association between optimism, productivity and innovative capabilities holds when changing from an individual to an aggregated level. We draw from a yearly sample of 42 countries between 2000 and 2020 and analysing the effect of optimistic producers and consumers. Using modern econometric techniques, our results suggest that producer optimism is associated with more researchers involved in research and development and higher total factor productivity increments (TFP), while consumer optimism only affects TFP. Moreover, the effect of optimism from producers on productivity is 33% higher than that from consumers. When separating the sample by country income levels, in high-income economies, more optimism increases the number of researchers, while in middle-income countries, optimism affects both spending on R&D and higher TFP. Our results suggest that optimism supports an increase in innovative activity, not an increase in innovative performance or quality of those innovations.