HOW EFFECTIVE ARE FISCAL INCENTIVES FOR R&D? A REVIEW OF THE EVIDENCE
This paper surveys the econometric evidence on the effective ness of fiscal incentives for R&D. We describe the effects of tax systems in OECD countries on the user cost of R&D - the currect 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.
John Van Reenen
7 Ridgmount Street
London WC1E 7AE
JEL Nos. H32 031 038