Fiscal Transparency and the Benefits of Government-Funded Research

Does enhancing fiscal transparency strengthen the impact of government-funded research? I investigate this question by exploiting the Federal Funding Accountability and Transparency Act of 2006 as a source of variation in the accessibility of financial and project-related information. Using a difference-indifferences approach combined with matching, I find evidence of a rise in follow-on innovation building on government-funded inventions following increased transparency. Additional analyses provide evidence consistent with reduced search costs, lower information asymmetries, and signaling of commercial opportunities as mechanisms. Spillovers are concentrated in follow-on inventions by non-government-funded firms operating in distinct technological areas. These findings underscore the role of information disclosure in increasing the social returns to publicly funded research.