A cost-benefit analysis of R&D tax incentives
Abstract
Although technical knowledge generates spillover benefits, production of technical knowledge creates congestion externalities; thus, private R&D investment could be inefficient. A computable general equilibrium model is used to rank tax incentives by their effects on research effort and measure welfare effects. Five results stand out: R&D tax credits produce relatively large increases in research effort and welfare. Lower corporate income tax rates and ITCs for downstream users of high-tech production inputs rank second. Revenue losses from lower personal income tax rates can produce welfare losses. Ironically, ITCs for upstream producers of innovative inputs are ineffective. Incremental R&D credits dominate comprehensive credits.Download Info
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Bibliographic Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 37 (2004)
Issue (Month): 2 (May)
Pages: 313-335
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Related research
Keywords:Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Brita Bye & Taran Fæhn & Tom-Reiel Heggedal, 2007. "Welfare and growth impacts of innovation policies in a small, open economy. An applied general equilibrium analysis," Discussion Papers 510, Research Department of Statistics Norway.
- Takalo , Tuomas, 2013.
"Rationales and instruments for public innovation policies,"
Research Discussion Papers
1/2013, Bank of Finland.
- Takalo, Tuomas, 2009. "Rationales and Instruments for Public Innovation Policies," Discussion Papers 1185, The Research Institute of the Finnish Economy.
- Pierre Mohnen & Boris Lokshin, 2009.
"What Does it Take for an R&D Tax Incentive Policy to Be Effective?,"
CIRANO Working Papers
2009s-11, CIRANO.
- Pierre Mohnen & Boris Lokshin, 2009. "What does it take for and R&D tax incentive policy to be effective?," Working Papers 2009/9, Institut d'Economia de Barcelona (IEB).
- Mohnen, Pierre & Lokshin, Boris, 2009. "What does it take for an R&D tax incentive policy to be effective?," UNU-MERIT Working Paper Series 014, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- repec:ays:ispwps:paper0810 is not listed on IDEAS
- Brita Bye & Taran Fæhn & Leo A. Grünfeld, 2008. "Growth policy in a small, open economy. Domestic innovation and learning from abroad," Discussion Papers 572, Research Department of Statistics Norway.
- Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
- Bev Dahlby, 2005. "A Framework for Evaluating Provincial R&D Tax Subsidies," Canadian Public Policy, University of Toronto Press, vol. 31(1), pages 45-58, March.
- Mariasole Bannò & Marika Vezzoli & Maurizio Carpita, 2011. "Disentangling the Innovation - Internalization Process Through a Structural Equation Model," ERSA conference papers ersa11p195, European Regional Science Association.
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