A panel data analysis of the long-run effect of environmental taxes on R&D expenditures at the macro-level

Dierk Herzer

Economics Bulletin, 2024, vol. 44, issue 3, 1169 - 1180

Abstract: Whether and how environmental taxes affect R&D at the macro-level is an empirical question that has not been addressed in the literature. This paper fills this gap by examining the impact of environmental taxes on R&D expenditures using panel data for the period 1994-2021 from 49 countries. The main results of this study are as follows: (i) environmental taxes have, on average, a positive long-run effect on R&D expenditures; (ii) the direction of causality runs from environmental taxes to R&D and not from R&D to environmental taxes; and (iii) while the long-run effect of environmental taxes varies across countries, it is positive in almost all cases, suggesting that the average positive long-run effect of environmental taxes on R&D is not driven by a few countries. We also find some evidence of a positive effect of environmental taxes on both environmental and non-environmental R&D, based on a smaller sample of countries over a shorter time period.

Keywords: environmental taxes; R&D expenditures; heterogeneous panel data techniques (search for similar items in EconPapers)
JEL-codes: H2 O3 (search for similar items in EconPapers)
Date: 2024-09-30
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