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Measuring the Effectiveness of R&D tax credits in the Netherlands

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  • Boris Lokshin
  • Pierre Mohnen

Abstract

This paper examines the impact of the Dutch R&D fiscal incentive program, known as WBSO, on R&D capital formation. Taking a factor-demand approach we measure the elasticity of firm R&D capital accumulation to its user cost. An econometric model is estimated using a rich unbalanced panel covering the period 1996-2004 with firm-specific R&D user costs varying with tax incentives. Using the estimated user cost elasticity, we examine the impact of the R&D incentive program. We find evidence that the program of R&D incentives in the Netherlands has been effective in reducing the user cost of R&D and in stimulating firms' investment in R&D.
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Suggested Citation

  • Boris Lokshin & Pierre Mohnen, 2007. "Measuring the Effectiveness of R&D tax credits in the Netherlands," CIRANO Working Papers 2007s-29, CIRANO.
    • Handle: RePEc:cir:cirwor:2007s-29
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    More about this item

    Keywords

    R&D tax credits; panel data; crowding out; user-cost elasticity.; crédit d'impôt à la recherche; données panel; coût d'usage à la recherche; crowding-out.;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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