Is Private R&D Spending Sensitive to Its Price? Empirical Evidence on Panel Data for Italy
Empirica, Kluwer Academic Publisher, Vol. 30, 2003, pp.357-377
Posted: 28 Jul 2012
Date Written: 2003
In this paper empirical evidence is presented on the elasticity of private R&D spending on its price. A censored panel-data regression model with random effects is applied to a balanced panel of 726 Italian firms over the 1992-1997 period. Implied estimates point out that Italian firms’ response to policy measures (including tax credits), aimed at reducing the user cost of R&D capital, is likely to be substantial (1.50-1.77). Furthermore, we also find that the elasticity of R&D spending is higher in recession (2.01) than in expansion (0.87).
Keywords: R&D user cost, panel data, tobit model
JEL Classification: C33, C34, H25, O31
Suggested Citation: Suggested Citation