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Is Private R & D Spending Sensitive to Its Price? Empirical Evidence on Panel Data for Italy

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Author Info

  • Maria Parisi
  • Alessandro Sembenelli

Abstract

In this paper empirical evidence is presented on the elasticity of private R&D spending on its price. A censored panel-data regression model with random effects is applied to a balanced panel of 726 Italian firms over the 1992-97 period. Implied estimates point out that Italian firms' response to policy measures (including tax credits), aimed at reducing the user cost of R&D capital, is likely to be substantial (1.50-1.77). Furthermore, we also find that the elasticity of R&D spending is higher in recession (2.01) than in expansion (0.87).

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1023/B:EMPI.0000005241.35057.4b
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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 30 (2003)
Issue (Month): 4 (December)
Pages: 357-377

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Handle: RePEc:kap:empiri:v:30:y:2003:i:4:p:357-377

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Web page: http://www.springerlink.com/link.asp?id=100261

Related research

Keywords: R & D user cost; panel data; tobit model;

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References

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  1. Bronwyn H. Hall & John van Reenen, 1999. "How Effective are Fiscal Incentives for R&D? A New Review of the Evidence," NBER Working Papers 7098, National Bureau of Economic Research, Inc.
  2. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
  3. Bo Honore & Ekaterini Kyriazidou & J. L. Powell, 2000. "Estimation of tobit-type models with individual specific effects," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 341-366.
  4. Hall, Bronwyn & Van Reenen, John, 2000. "How effective are fiscal incentives for R&D? A review of the evidence," Research Policy, Elsevier, vol. 29(4-5), pages 449-469, April.
  5. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  6. Arellano, Manuel & Honore, Bo, 2001. "Panel data models: some recent developments," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 53, pages 3229-3296 Elsevier.
  7. Scott, John T, 1995. "The Damoclean Tax and Innovation," Journal of Evolutionary Economics, Springer, vol. 5(1), pages 71-89, February.
  8. Honore, Bo E, 1992. "Trimmed LAD and Least Squares Estimation of Truncated and Censored Regression Models with Fixed Effects," Econometrica, Econometric Society, vol. 60(3), pages 533-65, May.
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Citations

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Cited by:
  1. Xulia González & Consuelo Pazó, 2002. "Firms’ R&D Dilemma: To Undertake Or Not To Undertake R&D," Working Papers 0208, Universidade de Vigo, Departamento de Economía Aplicada.
  2. Federico Biagi & Massimo Loi, 2011. "Do Innovation Incentives Work? Evidence From The Italian Manufacturing Sector," ERSA conference papers ersa11p681, European Regional Science Association.
  3. Bronwyn H. Hall & Raffaele Oriani, 2004. "Does the Market Value R&D Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France, Germany, and Italy," NBER Working Papers 10408, National Bureau of Economic Research, Inc.
  4. Bettina Becker, 2013. "The Determinants of R&D Investment: A Survey of the Empirical Research," Discussion Paper Series 2013_09, Department of Economics, Loughborough University, revised Sep 2013.
  5. Beatriz Corchuelo & Ester Martinez-Ros, 2009. "The Effects of Fiscal Incentives for R & D in Spain," Business Economics Working Papers wb092302, Universidad Carlos III, Departamento de Economía de la Empresa.
  6. Giorgio Barba Navaretti & Anthony J. Venables, 2013. "Multinationals and industrial policy," Oxford Review of Economic Policy, Oxford University Press, vol. 29(2), pages 361-382, SUMMER.
  7. Castellacci, Fulvio & Lie, Christine, 2013. "Do the effects of R&D tax credits vary across industries? A meta-regression analysis," MPRA Paper 47937, University Library of Munich, Germany.

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