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Fiscal incentives for research and development

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  • J. W. Fedderke
  • B. G. Teubes

Abstract

It is often argued that since the social return to R&D exceeds the private return, the government should provide incentives for R&D expenditure. This article considers the issue of the impact of such incentives on the fiscal position of the government, using a simple comparative static model. In particular, it is argued that it is possible that the social return from R&D might be sufficient to allow R&D incentives to more than pay for themselves. On the basis of the international evidence, the model is calibrated to examine what values of the key parameters are required in order for this conclusion to hold.

Suggested Citation

  • J. W. Fedderke & B. G. Teubes, 2011. "Fiscal incentives for research and development," Applied Economics, Taylor & Francis Journals, vol. 43(14), pages 1787-1800.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:14:p:1787-1800
    DOI: 10.1080/00036840802631827
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    References listed on IDEAS

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    1. Mani, Sunil, 2000. "Policy Instruments for Stimulating R&D in the Enterprise Sector: The Contrasting Experiences of Two MNC Dominated Economies from Southeast Asia," UNU-INTECH Discussion Paper Series 2000-09, United Nations University - INTECH.
    2. Bronwyn H. Hall, 1993. "R&D Tax Policy during the 1980s: Success or Failure?," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 1-36, National Bureau of Economic Research, Inc.
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    Cited by:

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