Publicly financed R D capital, R D tax policy, and productivity effects on the private sector
In this dissertation the author evaluates the federal government's direct and indirect role in stimulating private R D investment and productivity by estimating a translogarithmic cost function under different assumptions of firms' behavior and market equilibrium conditions. First, the author studies the existence and extent of an externality from publicly financed R D capital and the way it affects the cost structure of manufacturing industries at the two-digit level. Second, he provides econometric evidence of the effectiveness of R D tax policy in stimulating privately funded R D and output growth. Finally, he evaluates these policies by estimating the social rate of return of publicly funded R D and the additional privately funded R D expenditures generated by the R D tax policy relative to the foregone government tax revenues. The findings show that given an industry's output, publicly financed R D capital reduces the production cost in all industries in the sample, suggesting the existence of an externality from publicly financed R D. When output is allowed to adjust, publicly financed R D causes output to increase and cost per unit of output to decline. Labor inputs is a weak complement of publicly funded R D while intermediate inputs are substitutes. Publicly funded R D crowds out physical capital in all industries, induces private R D in some of the major receivers of publicly funded R D support, and crowds out private R D in the remaining industries. The author calculates that the social rate of return of publicly funded R D for the industries in the sample ranges from 6% to 23%. He estimates that the incremental R D tax credit introduced by the Economic Recovery Act of 1981 has a moderate effect in stimulated R D.
- Research Organization:
- New York Univ., NY (United States)
- OSTI ID:
- 5674470
- Country of Publication:
- United States
- Language:
- English
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