Do R&D tax credits work? Evidence from a panel of countries 1979-1997

Bloom, Nick, Griffith, Rachel and Van Reenen, John ORCID: 0000-0001-9153-2907 (2002) Do R&D tax credits work? Evidence from a panel of countries 1979-1997. Journal of Public Economics, 85 (1). pp. 1-31. ISSN 0047-2727

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Abstract

This paper examines the impact of fiscal incentives on the level of R&D investment. An econometric model of R&D investment is estimated using a new panel of data on tax changes and R&D spending in nine OECD countries over a 19-year period (1979–1997). We find evidence that tax incentives are effective in increasing R&D intensity. This is true even after allowing for permanent country-specific characteristics, world macro shocks and other policy influences. We estimate that a 10% fall in the cost of R&D stimulates just over a 1% rise in the level of R&D in the short-run, and just under a 10% rise in R&D in the long-run.

Item Type:	Article
Official URL:	http://www.elsevier.com/wps/find/journaldescriptio...
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HJ Public Finance
JEL classification:	L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C25 - Discrete Regression and Qualitative Choice Models O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
Date Deposited:	27 Apr 2007
Last Modified:	18 Nov 2024 06:39
URI:	http://eprints.lse.ac.uk/id/eprint/1353

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