Browsing by Subject "H25"

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  • Acemoglu, Daron; Akcigit, Ufuk; Alp, Harun; Bloom, Nicholas; Kerr, William (2018)
    American Economic Review 11 ; November
    We build a model of firm-level innovation, productivity growth, and reallocation featuring endogenous entry and exit. A new and central economic force is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using US Census microdata on firm-level output, R&D, and patenting. The model provides a good fit to the dynamics of firm entry and exit, output, and R&D. Taxing the continued operation of incumbents can lead to sizable gains (of the order of 1.4 percent improvement in welfare) by encouraging exit of less productive firms and freeing up skilled labor to be used for R&D by high-type incumbents. Subsidies to the R&D of incumbents do not achieve this objective because they encourage the survival and expansion of low-type firms.
  • Takalo, Tuomas; Tanayama, Tanja; Toivanen, Otto (2013)
    Bank of Finland Research Discussion Papers 2/2013
    Published in International Journal of Industrial Organization, Volume 31, Issue 5, September 2013, Pages 634–642
    We extend the theoretical basis of the empirical literature on the effects of R&D subsidies by providing an estimable model of strategic interaction among subsidy applicants, and public and private sector R&D financiers. Our model incorporates fixed R&D costs and a cost of external finance. We derive the optimal support rule. At the intensive (extensive) margin the costs of external funding reduce (increase) the optimal subsidy rate. We also establish necessary and sufficient conditions for the existence of additionality. It turns out that additionality at the intensive margin is less likely with large spillovers. Our results suggest that the relationship between additionality and welfare may not be straightforward. Keywords: R&D, entrepreneurial finance, R&D subsidies, innovation policy JEL classification numbers: O38, O31, L32, H25, G28
  • Takalo, Tuomas (2013)
    Bank of Finland Research Discussion Papers 1/2013
    Published in Journal of Reviews on Global Economics, Volume 1, 2012, Pages 157-167
    Economic interest in innovation policy largely arises from the fundamental importance of innovation to social welfare and from inefficiencies in innovation in a competitive market environment. As a result, a wide variety of public innovation policies are used in practice. This study reviews the economic justifications for public innovation policies and compares the existing policy tools, paying particular attention to the Finnish innovation policy environment. Key Words: Innovation policies, innovation, R&D, incentives, market failures JEL Classification: O38, O34, O31, G28, H25
  • Yakovlev, Andrei (2011)
    BOFIT Discussion Papers 10/2011
    Using data from a 2009 survey of 957 manufacturing enterprises, this paper examines relations between the state and business as well as priority differences in the distribution of governmental support by federal, regional and local authorities. Regression analysis reveals that a "model of exchange" is the predominant pattern as opposed to "state capture" (in the case of big firms) or "grabbing hand" (in the case of SMEs), both of which were typical of the 1990s. However, there are some differences in priorities at different levels of government. The federal government in 2007-2008 provided more support to state-owned and mixed enterprises providing stable employment, while regional authorities more often supported firms that were pursuing modernization. These trends could pave the way for a shift in governmental policy at the regional level from "state capture"/"grabbing hand" to the Chinese-style "helping hand" model. Keywords: state capture, state-business relations, Russia JEL: D22, H25, H71
  • Funke, Michael; Strulik, Holger (2003)
    BOFIT Discussion Papers 10/2003
    Published in Published in Finnish Economic Papers vol 19, no 1 (2006), pp. 25-38
    This paper analyses the long-run effects of Estonia s 2000 Income Tax Act with a dynamic general equilibrium model.Specifically, we consider the impact of the shift from an imputation system to one where companies only pay taxes on distributed profits.Balanced growth paths, transitional dynamics and welfare costs are computed. Our results indicate that the 2000 Income Tax Act leads to higher per capita income and investment, but lower welfare.A sensitivity analysis shows the results are rather robust. Keywords: growth, welfare, taxation, tax reform, Estonia JEL Classification: H25, H32, O41, O52
  • Nurmi, Satu; Vanhala, Juuso; Virén, Matti (2020)
    Bank of Finland Research Discussion Papers 8/2020
    We analyze the demographics of zombie firms and durations of zombie spells as well as their determinants, including an application on public subsidies using firm level population panel data from Finland. Firm-level analysis of firm demographics reveals that zombie-firms, as commonly defined in the literature, are often not truly distressed firms but rather companies with temporarily low revenues relative to interest payments. More importantly, we find that roughly a third of these firms are in fact growing companies and two thirds recover from the zombie status to become healthy firms. We also show that the increase of zombie firms over the past 15 years has mainly been driven by cyclical factors, as opposed to a secular trend. In our policy application on government subsidies to firms, estimation results strongly suggest that subsidy-receiving firms are less likely to die, regardless of the type of subsidy. However, with regard to recovery there is heterogeneity in the effects depending on the type of firm and the type of subsidy received. Thus, we do not find a robust positive association of subsidies with zombie recovery.