Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/39838 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3153
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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
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