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Do Canadian Firms Respond to Fiscal Incentives to Research and Development?

Marcel Dagenais, Pierre Mohnen () and Pierre Therrien ()

CIRANO Working Papers from CIRANO

Abstract: This study examines the effectiveness of R&D tax incentives using an unbalanced panel of 434 Canadian firms. Not all firms in the sample are R&D performers. A B-index summarizing the various tax incentives for R&D is constructed for each firm, taking into account individual ceilings in the use of the relevant tax incentives. A generalized Tobit model with fixed effects is estimated. A one percent increase in the federal tax credit to R&D yields an average of $0.98 additional R&D expenditure per dollar of tax revenues foregone (for firms with a ceiling in their use of federal tax credit). Using the same measure on firms which are not subject to a ceiling, we obtain $1.04. Tax transfers represent more than 80% of the cost of government support to R&D. Cet articleétudie l'effet des incitatifs fiscaux à la R&D à partir d'unéchantillon non cylindré de 434 firmes canadiennes (dont certaines ne font pas de R&D). Avec les données de Compustat, nous estimons un modèle Tobit généralisé (à effet fixe). Ce modèle détermine notamment l'effet du prix effectif de la R&D (indice-B tenant compte des différents plafonds dans l'utilisation des incitatifs fiscaux) sur le stock de la recherche. En augmentant d'un pourcent le crédit d'impôt fédéral à la R&D, nous obtenons en moyenne 0,98$ de dépenses additionnelles de R&D par dollar de dépense fiscale (firme ayant un plafond d'utilisation du crédit fédéral). Ce résultat est majoré à 1,04$ pour les firmes pouvant utiliser la totalité du crédit fédéral. Le transfert fiscal représente plus de 80 % du coût du soutien à la R&D par le gouvernement.

Keywords: Tax incentives; R&D; generalized Tobit panel; Canada; Incitatifs fiscaux; R&D; modèle Tobit généralisé; Canada (search for similar items in EconPapers)
JEL-codes: H32 O31 O38 (search for similar items in EconPapers)
Date: 1997-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19) Track citations by RSS feed

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Working Paper: Do Canadian Firms Respond to Fiscal Incentives To Research and Development? (1997)
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