Optimal Taxation and R&amp;D Policies

Akcigit, Ufuk; Hanley, Douglas; Stantcheva, Stefanie

doi:10.3386/w22908

Cited by 32 publications

(28 citation statements)

References 66 publications

(87 reference statements)

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“…Overall, our estimates need to be interpreted as partial equilibrium estimates of an increase in public R&D: the ultimate effect on US TFP growth inclusive of general equilibrium effects is likely to be smaller (e.g. Akcigit, Hanley and Stantcheva, 2017).…”

Section: An Illustration Of the Magnitude Of The Effectsmentioning

confidence: 99%

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

Moretti¹,

Steinwender²

2019

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In the US and many other OECD countries, expenditures for defense-related R&D represent a key policy channel through which governments shape innovation, and dwarf all other public subsidies for innovation. We examine the impact of government funding for R&D-and defense-related R&D in particular-on privately conducted R&D, and its ultimate effect on productivity growth. We estimate models that relate privately funded R&D to lagged government-funded R&D using industry-country level data from OECD countries and firm level data from France. To deal with the potentially endogenous allocation of government R&D funds we use changes in predicted defense R&D as an instrumental variable. In both datasets, we uncover evidence of "crowding in" rather than "crowding out," as increases in government-funded R&D for an industry or a firm result in significant increases in private sector R&D in that industry or firm. A 10% increase in government-financed R&D generates 4.3% additional privately funded R&D. An analysis of wages and employment suggests that the increase in private R&D expenditure reflects actual increases in R&D employment, not just higher labor costs. Our estimates imply that some of the existing crosscountry differences in private R&D investment are due to crosscountry differences in defense R&D expenditures. We also find evidence of international spillovers, as increases in government-funded R&D in a particular industry and country raise private R&D in the same industry in other countries. Finally, we find that increases in private R&D induced by increases in defense R&D result in significant productivity gains.

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Section: An Illustration Of the Magnitude Of The Effectsmentioning

confidence: 99%

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

Moretti¹,

Steinwender²

2019

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“…The closest paper in the past literature to ours is Akcigit, Hanley, and Stantcheva (2016), a paper written simultaneously with ours. Both our paper and theirs solves for the optimal tax treatment of innovative activity, but in very different settings with some issues appearing only in our paper and others appearing only in theirs.…”

Section: Prior Literaturementioning

confidence: 83%

“…This distinction between observable and unobservable inputs to innovative activity is a key complication driving the analysis inAkcigit, Hanley, and Stantcheva (2016).27 Attempting to sell the rights to the technology before it is patented to a firm free of such liquidity constraints is unlikely to work well, given the lack of legal protection to the ideas prior to the awarding of a patent.…”

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confidence: 99%

How should taxes be designed to encourage entrepreneurship?

Gordon¹,

Sarada

2018

Journal of Public Economics

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This paper examines how tax policy should be designed to best encourage entrepreneurial activity in start-up firms. We begin by describing several presumed market failures affecting entrepreneurial firms that would lead to an under-provision of entrepreneurial activity: 1) information spillovers from innovations in entrepreneurial firms to other firms, 2) positive externalities to consumers from innovative new products sold by these firms, and 3) lemons problems in the market for both debt and equity issued by these firms. We then analyze the degree to which various tax policy measures can alleviate these failures. A key complication we focus on is the inability of the government to observe which, and the degree to which, any given start-up firm is entrepreneurial. This forces policy to target behavioral differences between entrepreneurial and non-entrepreneurial start-ups. We presume that start-up firms, to the degree they are entrepreneurial, face upfront costs in developing and marketing a new technology, and in the process face substantial risk. Our analysis then suggests the use of refundable tax savings from business losses in start-ups together with a compensating surtax on the profits of startups (needed in the case of lemons problems) to help alleviate the various market failures faced by entrepreneurial start-ups.

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“…Acemoglu, Akcigit, Alp, Bloom, and Kerr 2013, Gorodnichenko and Schnitzer 2013, Khan 2015, Akcigit, Hanley, Stantcheva 2016 This market-conforming setting is usually described as involving pure pecuniary transactions, and confines the role of government to fiscal and monetary policies (e.g., taxes, subsidies), fixing market failures, and enforcing conventional absorption capabilities and market institutions (property rights, market integration, financial development). See, for instance,Barro 1997, Rodrik 2005, World Bank 2008, Lucas 2009, Spence 2011.…”

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confidence: 99%

Endogenous growth with national innovation systems

Jiménez¹,

Ricardo²

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Optimal Taxation and R&D Policies

Cited by 32 publications

References 66 publications

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers

How should taxes be designed to encourage entrepreneurship?

Endogenous growth with national innovation systems

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