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Title:Dynamically optimal R&D subsidization PDF Logo
Authors:Grossmann, Volker
Steger, Thomas M.
Trimborn, Timo
Issue Date:2010
Series/Report no.:CESifo working paper Fiscal Policy, Macroeconomics and Growth 3153
Abstract:Previous research on optimal R&D subsidies has focussed on the long run. This paper characterizes the optimal time path of R&D subsidization in a semi-endogenous growth model, by exploiting a recently developed numerical method. 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 negligible loss in welfare, however, from immediately setting the R&D subsidy to its optimal long run level, compared to the case where the dynamically optimal policy is implemented.
Subjects:R&D subsidy
transitional dynamics
semi-endogenous growth
welfare
JEL:H20
O30
O40
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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