Dynamically optimal R&D subsidization
BP2-STS
- Grossmann, Volker ORCID University of Fribourg, CESifo, IZA
- Steger, Thomas University of Leipzig, CESifo
- Trimborn, Timo University of Goettingen
- 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
-
- DOI 10.1016/j.jedc.2012.10.007
- ISSN 0165-1889
- Persistent URL
- https://folia.unifr.ch/unifr/documents/322922
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