Journal article

Dynamically optimal R&D subsidization

BP2-STS

  • 2013
Published in:
  • Journal of Economic Dynamics and Control. - Elsevier BV. - 2013, vol. 37, no. 3, p. 516-534
English This paper characterizes the optimal time path of R&D and capital subsidization. Starting from the steady state under current R&D subsidization in the US, the R&D subsidy should significantly jump upwards and then slightly decrease over time. There is a small loss in welfare, however, from immediately setting the R&D subsidy to its optimal long run level, compared to a time-varying R&D subsidy. The results do not depend on the financing scheme, namely lump sum taxation or factor income taxation. The optimal capital subsidy is time-varying under factor income taxation, but time-invariant when subsidies are financed by lump sum taxes.
Faculty
Faculté des sciences économiques et sociales et du management
Department
Département d'économie politique
Language
  • English
Classification
Economics
License
Rights reserved
Open access status
green
Identifiers
Persistent URL
https://folia.unifr.ch/unifr/documents/322922
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