The R&D Tax Credit in France: Assessment and Ex-Ante Evaluation of the 2008 Reform

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 pan...

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Bibliographic Details
Published in:NBER Working Paper Series 2013-05, p.19073
Main Authors: Mulkay, Benoît, Mairesse, Jacques
Format: Article
Language:English
Subjects:
Costs
Econometrics
Economic models
Economic reform
Economic statistics
Economic theory
Elasticity
Error correction & detection
Estimates
Higher education
Innovations
Price elasticity
R&D
Research & development
Research & development expenditures
Simulation
Studies
Subsidies
Tax credits
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Summary: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.
ISSN:0898-2937
DOI:10.3386/w19073