The R&D Tax Credit in France: Assessment and Ex-Ante Evaluation of the 2008 Reform

35 Pages Posted: 24 May 2013 Last revised: 8 Oct 2014

See all articles by Benoit Mulkay

Benoit Mulkay

Université Montpellier I - Department of Economics

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT); National Bureau of Economic Research (NBER)

Date Written: May 2013

Abstract

This article presents an econometric analysis of the direct effects of the R&D tax credit (RTC) on private R&D in France and proposes an ex ante evaluation of the major reform implemented in 2008. We first estimate an error correction model of a dynamic R&D demand function on a large panel data of R&D doing firms, obtaining a preferred estimate of -0.4 for the long run elasticity of the user cost of R&D capital. We then perform a micro-simulation of the effects of the 2008 RTC reform that shows that the implicit long run budget multiplier would be about 0.7.

Suggested Citation

Mulkay, Benoit and Mairesse, Jacques, The R&D Tax Credit in France: Assessment and Ex-Ante Evaluation of the 2008 Reform (May 2013). NBER Working Paper No. w19073. Available at SSRN: https://ssrn.com/abstract=2269526

Benoit Mulkay (Contact Author)

Université Montpellier I - Department of Economics ( email )

Avenue Raymond Dugrand, CS 79606
Montpellier Cedex 1, F-34000
France
+33-467158496 (Phone)
+33-467158486 (Fax)

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT)

Keizer Karelplein 19
6211 TC Maastricht
Netherlands

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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