taxes & R&D

Doug Henwood dhenwood at panix.com
Thu Oct 28 06:25:57 PDT 1999


[I think there was a question here recently about the relation between tax breaks & R&D.]

"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



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