Modelling and measuring the effects of public subsidies on business R&D: theoretical and econometric issues

Giovanni Cerulli

CERIS Working Paper from CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY

Abstract: It is the aim of this paper to review the principal econometric models used so far to measure the effect of government’s support to private R&D expenditure; in order to reach this task, we first present a basic theoretical framework to identify the effects of public subsidies on business R&D, going on by extending it to the case of dynamic complementarities and presence of subsidy spillovers. The review of the econometric models, the core of the paper, starts from section 4. We first classify econometric models according to three dimensions: 1. structural (based on a system of equations) and non-structural (based on a reduced-form equation and, possibly, a counterfactual) models; 2. models using the subsidy variable in a continuous or in a binary form; and finally, 3. studies exploiting a cross-section versus a longitudinal (panel data) structure. The final part of the paper is an original contribution providing some guidelines to implement R&D policy evaluation in a dynamic subsidization setting.

Keywords: business R&D; public incentives; econometric evaluation; dynamic treatment (search for similar items in EconPapers)
JEL-codes: C52 O32 O38 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2008-06
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~, nep-mic and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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