Welfare effects of R&D support policies
Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (18.01.2022)
Numero
2/2022Julkaisija
Bank of Finland
2022
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202201181023Tiivistelmä
We construct a model of innovation incorporating R&D externalities, R&D participation, financial market imperfections, and application and allocation of R&D subsidies, estimate it using Finnish R&D project level data and conduct a welfare analysis. The intensive, not the extensive R&D margin is important. Financial market imperfections are small.Tax credits and subsidies do not reach first best R&D but increase R&D 29-47% compared to laissez-faire. Welfare effects are small: Tax credits increase welfare 1%; subsidies reduce welfare once application costs are taken into accout. In terms of fiscal cost, tax credits are 90% more expensive than R&D subsidies.
Julkaisuhuomautus
This publication replaces BoF DP 30/2017 of the same name.
Tämä julkaisu korvaa samannimisen BOF DP:n 30/2017.
Tämä julkaisu korvaa samannimisen BOF DP:n 30/2017.