Bang for the Buck: Aggregate Impact of Firm-Level R&D Incentives

Marek Ignaszak, Daniel Robbins and SedlÃ¡Ä ek, Petr

No 20653, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: How do R&D incentives affect individual firms and, in turn, shape aggregate growth? We develop a novel empirical framework, grounded in endogenous growth theory, allowing us to measure firms’ responsiveness to R&D incentives and to aggregate such responses. After validating the predictions of our framework using three different micro-datasets, we apply it to Compustat data. We find that (i) ignoring firm heterogeneity severely under-states the aggregate effectiveness of R&D incentives, (ii) per dollar spent on R&D incentives, young (rather than small) firms raise aggregate growth the most and (iii) our results are robust to knowledge spillovers, dynamics and borrowing constraints.

Keywords: R&d policy; Heterogeneous firms; Economic growth (search for similar items in EconPapers)
JEL-codes: L1 O31 O38 (search for similar items in EconPapers)
Date: 2025-09
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP20653 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:20653

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP20653

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().