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R&D tax credits and their macroeconomic impact in the EU: an assessment using QUEST III

Miguel Sanchez-Martinez (), Cristiana Benedetti-Fasil (), Peder Christensen () and Nicolas Robledo-Bottcher ()
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Cristiana Benedetti-Fasil: European Commission – JRC,
Peder Christensen: European Commission - JRC,
Nicolas Robledo-Bottcher: European Commission - JRC,

No JRC108931, JRC Research Reports from Joint Research Centre (Seville site)

Abstract: R&D tax credits are currently used by 25 Member States as a means to stimulate R&D investment and, ultimately, economic growth and employment. This paper is a first attempt to provide an in-depth analysis of the structural economic factors that, other things equal, affect or condition the potential macroeconomic impacts of expanding (or start implementing) R&D tax credit schemes. The analysis is based on the European Commission's QUEST III semi-endogenous growth model. Our main conclusion is that, while the short and medium-term impacts of increased R&D tax credits on Member States' GDP and other macroeconomic aggregates are overall significantly positive, there remains space to substantially improve the cost-effectiveness of these policies.

Keywords: R&D tax credits; innovation; economic growth; macroeconomic modelling (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-eec, nep-ino, nep-pub and nep-sbm
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Handle: RePEc:ipt:iptwpa:jrc108931