This paper analyzes the effects of public R&D subsidies on R&D expenditure in the German manufacturing sector. The focus is on the question whether public R&D funding stimulates or crowds out private investment. Cross sectional data at the firm level is used. By apllying parametric and semiparametric selection models, it turns out that public funding increases firms? R&D expenditure. Altough the magnitude of the treatment effect depends on the assumptions imposed by the particular selection model.
Innovation Public R&D Subsidies Policy Evaluation Parametric and Semiparametric Two-Step Selection Models