Based on co-integration model and Granger cause test,by using data from 2002 to 2016, this paper empirically analyzed the relationship between government's R&D funding and innovation output of public R&D institutes in China. The empirical results indicate that a long-term, stable and equilibrium relation exists between government's R&D funding and public R&D institutes' invention patent authorization, and furthermore the contribution from government's R&D funding to public R&D institutes'

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... ion patent authorization is also significant in a short term; From the view of annual variation, the government's R&D funding is the Granger cause of public R&D institutes' granted invention patents, while the patents are not the Granger cause of government's R&D funding; As a practical conclusion, the government's R&D funding could expectedly improve innovation output of public R&D institutes in China.