Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284320 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. 970
Publisher: 
Queen Mary University of London, School of Economics and Finance, London
Abstract: 
Using a narrative identification of US tax changes over the post-WWII period, we show that corporate income tax cuts foster R&D spending and innovation, leading to a persistent increase in aggregate productivity and output. In contrast, changes in the average personal income tax rate have mostly short-term effects. An estimated endogenous productivity model highlights the role of "applied research" -over and above formal R&D- as a main force behind these results, and suggests a social rate of return to investment in innovation between 20% and 75%.
Subjects: 
corporate taxes
narrative identification
TFP
R&D
technological adoption
JEL: 
23
E62
O32
O34
O38
Document Type: 
Working Paper

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