NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Effective are Fiscal Incentives for R&D? A New Review of the Evidence

Bronwyn H. Hall, John van Reenen

NBER Working Paper No. 7098*
Issued in April 1999
NBER Program(s):   PE    PR

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.

*Published: Research Policy, Vol. 29 (May 2000).

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