Browsing by Subject "C31"

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  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2008)
    Bank of Finland Research Discussion Papers 7/2008
    Published in Review of Economics and Statistics, March 2013, Vol. 95, No. 1, Pages 255-272
    This paper studies the welfare effects of R&D subsidies. We develop a model of continuous optimal treatment with outcome heterogeneity where the treatment outcome depends on applicant investment. The model takes into account heterogeneous application costs and identifies the treatment effect on the public agency running the programme. Under the assumption of a welfare-maximizing agency, we identify general equilibrium treatment effects. Applyiing our model to R&D project-level data we find substantial treatment effect heterogeneity. Agency-specific treatment effects are smaller than private treatment effects. We find that the rate of return on subsidies for the agency is 30-50%. Keywords: applications, effort, investment, R&D, selection, subsidies, treatment programme, treatment effects, welfare JEL classification numbers: 038, 031, L53, C31
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2017)
    Bank of Finland Research Discussion Papers 30/2017
    We conduct a welfare analysis of R&D subsidies and tax credits using a model of innovation policy in corporating externalities, limited R&D participation and finanial market imperfetions. We estimate the model using R&D projet level data from Finland. The optimal R&D tax credit rate (0.24) is lower than the average R&D subsidy rate (0.36). The intensive, not the extensive margin of R&D is important for poliy. Tax credits and subsidies inrease R&D investments and spillovers compared to laissez-faire but to levels below the first best. R&D support policies don't improve welfare.