Evaluating the Impact of Innovation Incentives: Evidence from an Unexpected Shortage of Funds

35 Pages Posted: 9 May 2011 Last revised: 19 Jan 2016

Date Written: February 15, 2011

Abstract

To evaluate the effect of an R&D subsidy one needs to know what the subsidized firms would have done without the incentive. This paper studies an Italian programme of subsidies for the applied development of innovations, exploiting a discontinuity in programme financing due to an unexpected shortage of public money. To identify the effect of the programme, the study implements a regression discontinuity design and compares firms that applied for funding before and after the shortage occurred. The results indicate that the programme was not effective in stimulating innovative investment.

Keywords: R&D, public policy, evaluation

JEL Classification: O32, O38

Suggested Citation

de Blasio, Guido and Fantino, Davide and Pellegrini, Guido, Evaluating the Impact of Innovation Incentives: Evidence from an Unexpected Shortage of Funds (February 15, 2011). Bank of Italy Temi di Discussione (Working Paper) No. 792. Available at SSRN: https://ssrn.com/abstract=1830001 or http://dx.doi.org/10.2139/ssrn.1830001

Guido De Blasio (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Davide Fantino

Bank of Italy ( email )

Via Nazionale 91
Roma, 00184
Italy

Guido Pellegrini

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

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