"How Effective are Fiscal Incentives for R&D? A Review of the
Evidence"
BY: BRONWYN H. HALL
University of California at Berkeley
National Bureau of Economic Research (NBER)
JOHN VAN REENEN
University College London
Paper ID: NBER Working Paper No. 7098
Date: April 1999
Contact: BRONWYN H. HALL
Email: Mailto:bhhall at econ.berkeley.edu
Postal: University of California at Berkeley
549 Evans Hall
Berkeley, CA 94720-3880 USA
Phone: (510)642-3878
Fax: (510)548-5561
Co-Auth: JOHN VAN REENEN
Email: Mailto:Jvanreenen at ifs.org.uk
Postal: University College London
Gower Street
WC1E 6BT London, UK
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ABSTRACT:
This paper surveys the econometric evidence on the effectiveness
of fiscal incentives for R&D. We describe the effects of tax
systems in OECD countries on the user cost of R&D--the current
position, changes over time and across different firms in
different countries. We describe and criticize the methodologies
used to evaluate the effect of the tax system on R&D behavior
and the results from different studies. In the current
(imperfect) state of knowledge we conclude that a dollar in tax
credit for R&D stimulates a dollar of additional R&D.
JEL Classification: H32, O31, O38