The Effectiveness of R&D Tax Credits: Cross-Industry Evidence
AbstractThis paper presents new estimates of the efficacy of R&D tax incentives using cross-countrycross-industry data and a novel measure of tax policy that incorporates differences in the average capital–labour ratio in R&D investment across industries and variation in the tax treatment of different expenditure types across countries and over time. The results suggest that, in the short run, industry increases R&D investment by 0.24 dollars for every dollar of tax revenue forgone. The results appear to be more robust than estimates based on crosscountry or firm-level data.
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Bibliographic InfoPaper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2013n18.
Date of creation: May 2013
Date of revision:
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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
Phone: +61 3 8344 2100
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More information through EDIRC
Innovation policy; R&D tax credits; determinants of R&D investment;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-06-16 (Accounting & Auditing)
- NEP-ALL-2013-06-16 (All new papers)
- NEP-INO-2013-06-16 (Innovation)
- NEP-MAC-2013-06-16 (Macroeconomics)
- NEP-PBE-2013-06-16 (Public Economics)
- NEP-TID-2013-06-16 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Russell Thomson, 2010.
"Tax Policy and R&D Investment by Australian Firms,"
The Economic Record,
The Economic Society of Australia, vol. 86(273), pages 260-280, 06.
- Daniel J. Wilson, 2009. "Beggar Thy Neighbor? The In-State, Out-of-State, and Aggregate Effects of R&D Tax Credits," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 431-436, May.
- Russell Thomson, 2012.
"Measure of R&D Tax Incentives for OECD Countries,"
Melbourne Institute Working Paper Series
wp2012n17, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Dominique Guellec & Bruno Van Pottelsberghe De La Potterie, 2003.
"The impact of public R&D expenditure on business R&D,"
Economics of Innovation and New Technology,
Taylor & Francis Journals, vol. 12(3), pages 225-243.
- Dominique Guellec & Bruno van Pottelsberghe de la Potterie, 2000. "The Impact of Public R&D Expenditure on Business R&D," OECD Science, Technology and Industry Working Papers 2000/4, OECD Publishing.
- Bruno Van Pottelsberghe & Dominique Guellec, 2003. "The impact of public R&D expenditure on business R&D," ULB Institutional Repository 2013/6213, ULB -- Universite Libre de Bruxelles.
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