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

M. Dagenais, Pierre Mohnen and Pierre Therrien ()

G.R.E.Q.A.M. from Universite Aix-Marseille III

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 relevant tax incentives. A generalized Tobit model with fixed effects is estimated. A one percent increase in the federal tax credit of R&D yields an average of $0.98 additional R&D expenditure per dollar of tax revenues foregone.

Keywords: TAX INCENTIVES; RESEARCH AND DEVELOPMENT; CANADA (search for similar items in EconPapers)
JEL-codes: H32 O31 O38 (search for similar items in EconPapers)
Pages: 43 pages
Date: 1997
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Citations: View citations in EconPapers (23)

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Working Paper: Do Canadian Firms Respond to Fiscal Incentives to Research and Development? (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aixmeq:97b05

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