Working Paper: NBER ID: w5059
Authors: Theofanis P. Mamuneas; M. Ishaq Nadiri
Abstract: This paper estimates and evaluates the contributions of R&D tax incentives and publicly financed R&D investment policies in promoting growth of output and privately funded R&D investment in US manufacturing industries. Publicly financed R&D induces cost savings but crowds out privately-financed R&D investment while the incremental R&D tax credit and the immediate deductibility provision of R&D expenditures have a significant impact on privately financed R&D investment. The optimal mix of both instruments is an important element for sustaining a balanced growth in output and productivity in the manufacturing sector.
Keywords: R&D; tax incentives; public financing; manufacturing; cost behavior
JEL Codes: O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Publicly financed R&D (O32) | Cost savings (D61) |
| Publicly financed R&D (O32) | Privately financed R&D investment (O32) |
| R&D tax incentives (O32) | Privately financed R&D investment (O32) |
| Incremental R&D tax credit (O39) | Privately financed R&D investment (O32) |
| Immediate deductibility of R&D expenditures (O32) | Privately financed R&D investment (O32) |