This paper examines the impact of fiscal incentives on the level of R&D investment. An econometric model of R&D investment is estimated using a new panel of data on tax changes and R&D spending in nine OECD countries over a nineteen year period (1979- 1997). We find evidence that tax incentives are effective in increasing R&D intensity. This is true even after allowing for permanent country specific characteristics, world macro shocks and other policy inuences. We estimate that a 10 per cent fall in the cost of R&D stimulates just over a 1 per cent rise in the level of R&D in the short-run; and just under a 10 per cent rise in R&D in the long-run.
Find the working paper here.
Authors
CPP Co-Director, IFS Research Director
Rachel is Research Director and Professor at the University of Manchester. She was made a Dame for services to economic policy and education in 2021.
Nicolas Bloom
John Van Reenen
Journal article details
- Publisher
- The IFS
- JEL
- L13, 031, C25
- Issue
- August 2002
Suggested citation
N, Bloom and R, Griffith and J, Van Reenen. (2002). 'Do R&D tax credits work? evidence from a panel of countries 1979 - 1997' (2002)
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