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Dynamically Optimal R\& D Subsidization

Volker Grossmann (), Thomas Steger () and Timo Trimborn ()

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Previous research on optimal R\& D subsidies has focussed on the long run. This paper characterizes the optimal time path of R\& D subsidization in a semi- endogenous growth model, by exploiting a recently developed numerical method. Starting from the steady state under current R\& D subsidization in the US, the R\& D subsidy should significantly jump upwards and then slightly decrease over time. There is a negligible loss in welfare, however, from immediately setting the R\& D subsidy to its optimal long run level, compared to the case where the dynamically optimal policy is implemented.

Keywords: R\& D subsidy; Transitional dynamics; Semi-endogenous growth; Welfare (search for similar items in EconPapers)
JEL-codes: H20 O30 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-ino
Date: 2010-08
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Related works:
Journal Article: Dynamically optimal R&D subsidization (2013) Downloads
Working Paper: Dynamically optimal R&D subsidization (2011) Downloads
Working Paper: Dynamically Optimal R&D Subsidization (2010) Downloads
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