Is Private R&D Spending Sensitive to its Price? Empirical Evidence on Panel Data for Italy

Parisi, Maria Laura; Sembenelli, Alessandro

doi:10.2139/ssrn.265394

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Is Private R&D Spending Sensitive to its Price? Empirical Evidence on Panel Data for Italy

Boston College Dept. of Econ. Working Paper No. 493

25 Pages Posted: 2 Apr 2001

See all articles by Maria Laura Parisi

Maria Laura Parisi

University of Brescia, Department of Economics and Management

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato

Date Written: February 2001

Abstract

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 1992-97 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 of Capital, Public Incentives, Panel Data

JEL Classification: H25, O30, C23

Suggested Citation: Suggested Citation

Parisi, Maria Laura and Sembenelli, Alessandro, Is Private R&D Spending Sensitive to its Price? Empirical Evidence on Panel Data for Italy (February 2001). Boston College Dept. of Econ. Working Paper No. 493, Available at SSRN: https://ssrn.com/abstract=265394 or http://dx.doi.org/10.2139/ssrn.265394