Working Paper: NBER ID: w19073
Authors: Benoît Mulkay; Jacques Mairesse
Abstract: This article presents an econometric analysis of the direct effects of the R&D tax credit (RTC) on private R&D in France and proposes an ex ante evaluation of the major reform implemented in 2008. We first estimate an error correction model of a dynamic R&D demand function on a large panel data of R&D doing firms, obtaining a preferred estimate of -0.4 for the long run elasticity of the user cost of R&D capital. We then perform a micro-simulation of the effects of the 2008 RTC reform that shows that the implicit long run budget multiplier would be about 0.7.
Keywords: R&D tax credit; private R&D investment; econometric analysis; 2008 reform
JEL Codes: H25; H32; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| R&D tax credit reform (O39) | private R&D investment (O32) |
| decrease in user cost of R&D capital (O39) | increase in R&D investment (O39) |
| R&D tax credit reform (O39) | increase in private R&D expenditure (O39) |