The Impact of R&D Subsidies During the Crisis

Posted: 17 Apr 2014 Last revised: 30 Jun 2015

See all articles by Martin Hud

Martin Hud

ZEW – Leibniz Centre for European Economic Research

Katrin Hussinger

Universite du Luxembourg; Catholic University of Leuven (KUL); Centre for European Economic Research (ZEW)

Date Written: March 15, 2014

Abstract

This study investigates the impact of R&D subsidies on R&D investment during the past financial crisis. We conduct a treatment effects analysis and show that R&D subsidies increased R&D spending among subsidized small and medium sized firms in Germany during the crisis years. In the first crisis year, the additionality effect induced by public support was, however, smaller than in other years. This temporary decrease may be caused by an altered innovation subsidy scheme in crisis years or by a different innovation investment behavior of the subsidy recipients. We do not find support for the countercyclical innovation subsidy scheme having caused the smaller additionality effect and conclude that it is likely to be driven by subsidy recipient behavior.

Keywords: R&D, Subsidies, Policy Evaluation, Financial Crisis, Treatment Effects

JEL Classification: C14, C21, G01, H50, O38

Suggested Citation

Hud, Martin and Hussinger, Katrin, The Impact of R&D Subsidies During the Crisis (March 15, 2014). Research Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2426053 or http://dx.doi.org/10.2139/ssrn.2426053

Martin Hud (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Katrin Hussinger

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Catholic University of Leuven (KUL) ( email )

Steunpunt O&O Statistieken
Dekenstraat 2
B-3000 Leuven
Belgium

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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